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.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
Whether the exeption to the term "immovable property" in subparagraph 7(b) of Article 13 of the Canada-U.K. Convention should be applied on a "look-through" basis.
Position TAKEN:
Yes
Reasons FOR POSITION TAKEN:
Given that paragraph 5 of Article 13 is to be applied on a look-through basis, it is only logical that subparagraph be applied on the same basis.
950091
XXXXXXXXXX David R. Senécal
Attention: XXXXXXXXXX
June 12, 1995
Dear Sirs:
Re: Article 13 of the Canada - United Kingdom Income Tax Convention
This is in reply to your letter of January 5, 1995, wherein you request our opinion as to the application of subparagraphs 5(a) and 7(b) of Article 13 of the Canada - United Kingdom Income Tax Convention (the "Convention"). We apologize for the delay in responding to your enquiry.
At issue is the question of whether the exception to the term "immovable property" found in subparagraph 7(b) of Article 13 of the Convention should be applied on a "look-through basis" for the purposes of subparagraph 5(a) of that Article.
Paragraph 5 of Article 13 of the Convention provides that "gains from the alienation of shares ... deriving their value or the greater part of their value directly or indirectly from immovable property situated in a Contracting State ... may be taxed in that State". In our view, this provision is to be applied on a look-through basis in determining to what the value of the shares is attributable.
Subparagraph 7(b) of Article 13 of the Convention provides that, for the purposes of paragraph 5 of Article 13, the term "immovable property" does not include any property (other than rental property) in which the business of the company, partnership or trust was carried on.
Given the fact that paragraph 5 of Article 13 of the Convention is to be applied on a look-through basis, it is our position that subparagraph 7(b) of Article 13 of the Convention, which specifically excludes property that would otherwise be immovable property, should also be applied on the same look-through basis.
We trust that the above comments will be of assistance to you.
Yours truly,
for Director
Reorganizations and Foreign Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1995
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1995
Email this Content