CRA finds that a partnership is transparent for Treaty gains exemption purposes

The gains exemption in the Canada-Singapore Convention does not apply to "gains from the alienation of shares of a company, or of an interest in a partnership or a trust, the property of which consists principally of immovable property… ." Given this "consists of" rather than "derived from" wording, CRA accepts that this provision does not apply to a sale by a Singapore resident of shares of a Canadian company (Canco) which does not directly hold Canadian real estate. However, where the Canco held Quebec immovable property through two partnerships, CRA considered that the partnerships

are not distinct persons for purposes of the Convention and that their respective patrimonies can be assimilated to that of their members [so that] the Canadian immovable properties which are held by means of [them] should be considered as being directly held by Canco to the extent of its interests in them.

Accordingly, the gain on selling Canco shares was not Treaty-exempt.  Given that the Treaty wording quoted above treats partnership interests as distinct and that a particular partner does not own partnership property, this interpretation is debatable.

Neal Armstrong. Summary of 14 April 2014 Memo 2013-0516151I7 F under Treaties – Art. 13.