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.
H.K. Tilak (613) 957-2122
APR 25 1989
Dear Sirs:
Re: Section 110.6 of the Income Tax Act
We are writing in response to your letter of April 13, 1989 in which you requested our opinion regarding the application of section 110.6 of the Income Tax Act (the "Act") to the hypothetical situation described below.
In the hypothetical situation you describe, an individual (other than a trust) who is resident in Canada for the purposes of the Act throughout the taxation year disposes of capital property that is real estate situated in Canada and realizes a capital gain. It is your view that, notwithstanding that the individual is deemed to be a resident of the United States and not of Canada pursuant to Article IV of the Canada-United States Income Tax Convention, 1980 (the "treaty"), the individual will meet the residence requirement of subsection 110.6(3) of the Act and will not, by reason only of his residence status under the treaty, be denied the benefit of subsection 110.6(3) of the Act in that taxation year.
We agree with your view. There are no provisions in the treaty that would preclude Canada from taxing the capital gain realized by such an individual (subject to the transitional rule in paragraph 9 of Article XIII of the treaty). For the purposes of subsection 110.6(3) of the Act, the individual's residence status under the treaty is of no consequence because there are no provisions in the treaty that would preclude Canada from permitting the individual to claim the benefit of subsection 110.6(3) of the Act.
The foregoing comment is not a ruling and, in accordance with the guidelines set out in Information Circular 70-6R dated December 18, 1978, is not binding on the Department.
Yours truly,
for Director Reorganizations and Non-Resident Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch
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© Her Majesty the Queen in Right of Canada, 1989
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