Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
The amount of tax payable in Canada by a resident of Ireland on the disposition of shares that are taxable Canadian property.
Position TAKEN:
15% pursuant to the Canada-Ireland Income Tax Agreement
Reasons FOR POSITION TAKEN:
Pursuant to Article VI of the Canada-Ireland Income Tax Agreement, the maximum rate of tax applicable to income, other than income from carrying on a business in Canada and performing duties in Canada, derived from sources within Canada is 15%. There is no specific provision in the Agreement which overrides Article VI with respect to capital gains.
950181
XXXXXXXXXX A. Seidel
Attention: XXXXXXXXXX
April 26, 1995
Dear Sirs:
This is in reply to your letter dated January 16, 1995 with respect to the application of the Income Tax Act (the "Act") and the Canada-Ireland Income Tax Agreement (the "Agreement") to the disposition of shares that are taxable Canadian property by a resident of Ireland. The expression "taxable Canadian property" has the meaning assigned by paragraph 115(1)(b) of the Act.
Pursuant to paragraph 2(3)(c) of the Act, a capital gain realized by a non-resident person on the disposition of shares that are taxable Canadian property is subject to an income tax in Canada in accordance with Division D of the Act. Subparagraphs 115(1)(b)(iii) and (iv) of the Act describe those shares of the capital stock of a corporation which are taxable Canadian property.
In the situation where the non-resident disposing of the shares is a resident of Ireland, the Agreement will determine the amount of income tax imposed on the non-resident by Canada. Pursuant to Article VI of the Agreement, the maximum rate of Canadian tax on income (other than income from carrying on business in Canada or from performing duties in Canada) derived from sources within Canada by a resident of Ireland is 15%. Since there is no other provision in the Agreement which specifically deals with the taxation of capital gains, a non-resident person who is resident in Ireland for purposes of the Agreement will be subject to the 15% maximum rate of tax on the capital gain.
These comments are provided in accordance with the guidelines set out in paragraph 21 of Information Circular 70-6R2.
Yours truly,
for Director
Reorganizations and Foreign Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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