6 November 1992 Income Tax Severed Letter 9233205 - Article XIII, 7(b) of U.K. Convention

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.

923320
24(1) G. Middleton
(613)957-2122

Attention: 19(1)

November 6,1992

Dear Sirs:

Re: Canada-U.K. Income Tax Convention

This letter is in reply to your fax dated November 5, 1992 in which you requested our views with respect to paragraph 7(b) of Article XIII of the Canada-U.K. Income Tax Convention.

The Department's positions concerning what is meant by "property, other than rental property, in which the business of the company was carried on" (hereinafter called "Excluded Property") are as follows:

• 1. The term "rental property" means property rented by the company as landlord/lessor.

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• 2. Factories, processing plants and affixed machinery and equipment operated by the company and the land under and/or adjacent thereto and necessary for the use thereof are Excluded Property.
• 3. Oil and gas reserves, mines and royalty interests are Excluded Property if the owner is actively engaged in the exploitation of natural resources and if such assets are actively exploited or kept for future exploitation by such owner, subject to the exception relating to hydrocarbons in the Canada-U.K. Convention.
• 4. Office buildings (if not rental property or inventory) and the land under and/or adjacent thereto and necessary for the use thereof are Excluded Property.
• 5. Immovable property (e.g. real estate) that is inventory of the company is not Excluded Property.
• 6. Immovable property (e.g. real estate) that is not used or held for use in the company's business but is held as an investment for capital gains is not Excluded Property.

We hope these comments will be helpful.

Yours truly,

for Director
Reorganizations and Foreign Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch

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