7 July 2011 External T.I. 2011-0403271E5 - Non-resident's taxable income in Canada

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 a non-resident's purchase of gold bullion in Canada would constitute a taxable Canadian Property? Whether a T2062 would be required upon disposition.

Position: No

Reasons: The gold bullion would not meet the definition as a taxable Canadian property under section 248(1).

XXXXXXXXXX
					2011-040327
					J. Nichols

July 7, 2011

Dear XXXXXXXXXX :

RE: Non-resident's taxable income in Canada

This is in response to your letter dated April 13, 2011 wherein you requested clarification on whether a non-resident taxpayer would own "taxable Canadian property", as defined in subsection 248(1) of the Income Tax Act (Canada)(the "Act") as a result of his purchase of gold bullion. Your concern pertains to whether a subsequent gain or loss would be included in the non-resident's taxable income earned in Canada under paragraph 115(1)(b) of the Act and whether the provisions of section 116 of the Act apply at such time. Our understanding of the relevant facts is as follows:

1. Non-resident individual has acquired gold bullion in Canada.
2. The gold is physically located at a Canadian chartered bank branch in Canada.
3. A delivery slip was issued acknowledging receipt of the gold, as witnessed by the non-resident's agent in Canada.
4. We have assumed that the gold is capital property of the taxpayer.

Our comments

Written confirmation of the tax implications inherent in particular transactions may only be provided by this Directorate where the transactions are proposed, and are the subject matter of an advance income tax ruling, submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Ruling, dated May 17, 2002. This Information Circular and other Canada Revenue Agency ("CRA") publications can be accessed on the Internet at http://www.cra-arc.gc.ca. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office, a list of which is available on the "Contact Us" page of the CRA website. We are, however, prepared to provide the following general comments.

Provided that the gold bullion is not part of the inventory of a business carried on by the non-resident in Canada, it is our view that the gold bullion would not constitute taxable Canadian property as defined in subsection 248(1) of the Act. Accordingly, a capital gain or loss of the taxpayer resulting from the disposition of such gold bullion would not be included in the taxable income earned in Canada of the taxpayer pursuant to paragraph 115(1)(b) of the Act and the provisions of section 116 of the Act would not apply to such disposition.

We trust our comments will be of assistance.

Yours truly,

Olli Laurikainen
Manager
International Section II
Income Tax Rulings Directorate
Legislative Policy & Regulatory Affairs Branch