ARTICLE 20

Students and Trainers

The 1954 Convention provided that a resident of one State who was temporarily present in the other State solely as a student at a recognized university, college or school was exempt from the tax of the other State with respect to remittances from abroad, including any payments by his employer abroad. There was a similar exemption with respect to a grant, allowance, or award (other than compensation for personal services) from a religious, charitable, scientific, literary, or educational organization of the State of residence of an individual who was temporarily present in the other State and to whom the grant, allowance, or award was remitted from abroad.

The new Convention provides an exemption for an individual who is a resident of one State, who, at the time he is a resident of that State, becomes temporarily present in the other State for the purpose of studying at a university or other accredited educational institution, securing training for qualification in a profession, or studying or doing research as a recipient of

a grant, allowance, or award from a governmental, religious, charitable, scientific, literary; or educational institution. Such an individual is exempt from tax in the host State on:

1. Gifts from abroad for his maintenance and study;
2. The grant, allowance, or award; and
3. Income from personal services performed in the host State in the aggregate amount not in excess of $2,000 (or its equivalent in Japanese yen) for any taxable year.

Under this article and paragraph (3) of Article 22 (relating to rules applicable to personal income articles), these exemptions continue only for such period of time as may be reasonably or customarily required to effectuate the purpose of his visit but in no event may an individual have the benefit of this provision for more than a total of 5 taxable years from the date of his arrival.

In addition, a resident of one State employed by, or under contract with, a resident of that State who, at the time he is a resident of that State, becomes temporarily present in the other State for the purpose of studying or acquiring technical, professional, or business experience from a person other than a resident of the first-mentioned State, is exempt from tax in the host State on income not in excess of $5,000 (or its equivalent in Japanese yen) from personal services. The individual is exempt for a period of 12 consecutive months which period commences with the first month in which he begins working or receives compensation. The 1954 Convention provided a corresponding exemption of $6,000 (or its equivalent in Japanese yen). However, the application of the exemption was in other respects more restricted than in the new Convention since it applied only in cases in which the individual was temporarily present solely to acquire technical, professional, or business experience from a person other than his employer. The old exemption applied only to compensation from abroad paid by such individual's employer for his services rendered during the period of his temporary presence.

Also, an individual who is a resident of one State who, at the time he is a resident of that State, becomes temporarily present in the host State as a participant in a government program of the host State for the primary purpose of training, research, or study is entitled to an exemption by the host State with respect to his income from personal services relating to such training, research, or study performed in the host State in an amount not in excess of $10,000 (or its equivalent in Japanese yen). To be entitled to this exemption, the individual's presence in the host State must not exceed one year in duration.

If a person covered by this article derives income in excess of the amount specified ($2,000; $5,000; or $10,000), the exemption applies up to the applicable maximum and the excess is subject to tax in the normal manner.