29 April 1987 Income Tax Severed Letter 5-3203 - [870429]

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.

M. Carsley (613) 957-2117

Attention: XXXX

April 29, 1987

Dear Sirs:

This is in reply to your letter of April 9, 1987 in which you requested our opinion on certain issues which can be addressed within the context of the hypothetical situation which is described in the following paragraph.

C, a Canadian corporation, is owned 100% by partnership P, which is a limited partnership created under the laws of a province of Canada. All the partners of P are U.S. residents within the meaning of Article IV of the Canada-U.S. 1980 Tax Convention (the "Treaty").

With respect to your first question, it is our opinion that on dividends paid from C to P the partners of P may be eligible under Article X(2)(b) of the treaty for the reduced rate of withholding tax of 15%.

With respect to your second question, the provisions of Article XIII of the Treaty may apply to the partners of P with respect to any gain realized on the sale of the shares of C by P.

We trust this information will be of assistance to you.

Yours truly,

for Director Reorganizations and Non-Resident Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch