CRA considers that “income” for FTC Treaty purposes includes taxable capital gains
29 January 2014 - 9:02am
Unlike many other Treaties, the double taxation article of the Canada-Brazil Treaty refers to Canada allowing a foreign tax credit for Brazilian income tax on "income," rather than "income or gains," which may be taxed in Brazil. However, CRA accepts that "income" includes taxable capital gains. Accordingly, a Canadian company which has sold its shares of a Brazilian company is allowed a foreign tax credit, against its Canadian income tax on that gain, for the Brazilian gains tax (notwithstanding that under Canadian domestic principles, that gain may be considered to be from a Canadian source).
Neal Armstrong. Summary of 13 January 2014 T.I. 2013-0512581E5 under Treaties – Art. 24.