Lang suggests that the Sommerer Treaty approach is inconsistent with the OECD partnership report
In Sommerer, Sharlow JA found obiter that the gains exemption article in the Canada-Austrian treaty would have precluded the purported application of a Canadian domestic gains attribution rule (s. 75(2)) to the Canadian taxpayer in that case even though the person invoking the exemption was that Canadian resident rather than the Austrian alienator (i.e., an Austrian foundation) of the Canadian shares giving rise to the attributed gain. She found that preventing such "economic" double taxation was within the intended general purview of the treaty.
Michael Lang suggests that the "allocation conflict" arising on the Sommerer facts (i.e., Austria treating the Austrian foundation as the taxpayer, but with Canada attempting to treat the foundation as transparent) is analogous to Case study 16 of the OECD partnership report respecting a partnership with Partner A resident in State P and Partner B resident in state R. The partnership has a permanent establishment in State P and is treated as a taxable entity by State P while State R treats it as transparent and seeks to tax partner B on royalty income derived by the partnership.
Lang notes that the majority opinion in the partnership Report was that State R is able to tax partner B on his share of the royalty income. Under the same approach, Canada would be able to tax the Canadian taxpayer on gain of the foundation that under Canadian principles was allocated to the Canadian resident (if CRA had successfully established that s. 75(2) applied under Canadian domestic law).
Neal Armstrong. Summary of Michael Lang, "Income Allocation Issues Under Tax Treaties," Tax Notes International, April 21, 2014, p. 285 under Treaties - Article 13 and Treaties - General and summaries of Sommerer v. The Queen, 2012 FCA 207 under Treaties - Article 13, Treaties- General and ITA 75(2).