Set-ExternalInOutlook -AllowList {sub.domain.ca} still tagging emails as External

After configured Set-ExternalInOutlook to true, I noticed emails sent using our primary SMTP domain from on premise apps to sub-domain-ca.mail.eo.outlook.com (Exchange Online),  are still being tagged with External. I added our primany SMTP domain to the AllowList, "sub.domain.ca" but they are still being tagged as External.

I was expected this would fix the issue but it has not. Is this expected behavior since it's using the same sub SMTP domain? 

thanks!