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.
Principal Issues: Whether paragraph 4 of Article XIII of the Canada-US Treaty will apply to the disposition of taxable Canadian property (shares) by a US partnership that has elected to be treated as a corporation for US income tax purposes.
Position: Yes.
Reasons: The US partnership will be considered to be a "resident" of the US, within the meaning thereof in Article IV of the Canada-US Treaty, such that paragraph 4 of Article XIII will apply to the disposition of the shares.
XXXXXXXXXX 2005-015581
XXXXXXXXXX, 2005
Dear XXXXXXXXXX:
Re: XXXXXXXXXX
Advance Income Tax Ruling - 2005-014022
This is in response to your XXXXXXXXXX request for amendments to advance income tax ruling #2005-014022, which was issued on XXXXXXXXXX, 2005 (the "Ruling").
1. Paragraph 17 of the Ruling is amended to read:
"Canco will pay Holdco a cash dividend of approximately $XXXXXXXXXX (in Canadian currency). Part XIII tax will be withheld by Canco and remitted to the Receiver General in accordance with subsection 215(1) of the Act."
2. Existing paragraph 17 of the Ruling becomes new paragraph 18 of the Ruling and existing paragraph 18 of the Ruling becomes new paragraph 19 of the Ruling. As a result of these changes, the reference in existing paragraph 17 of the Ruling "(see paragraph 18 below)" is amended to "(see paragraph 19 below)".
3. The following is added as paragraph 20 of the Ruling:
"The dividend to be paid by Canco to Holdco, as described in paragraph 17 above, will enable Canco to distribute excess cash to Holdco which will, in turn, enable the Group to meet its cash flow requirements in the US."
Subject to the limitations and qualifications referred to therein, and notwithstanding that some of the proposed transactions have been completed and notwithstanding the amendments described above, the rulings given in the Ruling will continue to be binding on the Canada Revenue Agency provided that the remaining proposed transactions are implemented on or before XXXXXXXXXX.
Yours truly,
XXXXXXXXXX
for Director
International & Trusts Division
Income Tax Rulings Directorate
Policy and Planning Branch
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