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: Is it possible that section 119 can apply to reduce Part XIII taxes withheld on a deemed dividend in respect of a shares of corporation that was wound up subsequent to emigrating from Canada to the U.S.?
Position: Question of fact.
Reasons: See below.
March 5, 2012
Dear XXXXXXXXXX :
Re: Recovery of Departure Tax
This letter is a follow-up to our previous letter dated February 6, 2012 in respect of File # 2011-042721. Upon further review, we wanted to make sure that you were aware that Part XIII tax paid on dividends may be credited under section 119 of the Income Tax Act ("Act") against the tax imposed on the departure gain on the shares where the capital property disposed was taxable Canadian property ("TCP") of the taxpayer throughout the period that began at the point of emigration and that ends at the time at which the individual disposes of the property.
In this case, the shares in question would only be considered TCP if they meet the requirements set out in paragraph (d) of the definition of "taxable Canadian property" under subsection 248(1) of the Act. The facts provided by you in your previous letter do not provide enough information to determine whether the shares in question were TCP throughout the period that began on the deemed disposition on emigration in 2009 and ended with the actual disposition in 2011. As a result, it is unclear whether section 119 would apply in this case.
We trust these comments will be of some assistance.
International Division/ Division des opérations internationales
International Section III
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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