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.
Dear Sirs:
Re: Paragraph 8 of Article XIII of the Canada-U.S. Income Tax Convention and section 115.1 of the Income Tax Act (the "Act")
This is in response to your letter of February 14, 1990 wherein you requested that we reconsider the opinion expressed in our letter to you of January 24, 1990 in light of section 115.1 of the Income Tax Act (the "Act"). Our letter expressed our view as to the application of paragraph 8 of Article XIII of the Canada-U.S. Income Tax Convention (1980) (the "Convention") to the situation described in your earlier letter of September 21, 1989.
We have reviewed the provisions of section 115.1 of the Act and the Technical Notes to a Notice of Ways and Means Motion Relating to Income Tax issued by the Department of Finance on June 5, 1987 (the "Technical Notes") with respect to the enactment of that section. We are sorry that we do not concur with your observation that "the only possible circumstances to which section 115.1 could apply with respect to a partnership is paragraph 8 of Article XIII of the Canada-U.S. Income Tax Convention". In our view, section 115.1 was not enacted specifically for paragraph 8 of the Convention. This is evidenced by the last sentence of the first paragraph on page 63 of the Technical Notes, which states as follows:
"This new section will also accommodate similar provisions which, although not in force at this time, have been included in Canada's tax treaties with France and the Netherlands or will be included in future tax treaties".
Consequently, section 115.1 of the Act is a section which could eventually be applicable to all of Canada's tax treaties. It is, therefore, worded in a broad manner.
We have stated in our letter of January 24, 1990 two main reasons why we believe that paragraph 8 of the Convention would not apply to the situation described in your earlier letter. We do not believe that the wording used in section 115.1 offers any valid reason for us to alter our opinion on this matter.
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© Her Majesty the Queen in Right of Canada, 1990
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© Sa Majesté la Reine du Chef du Canada, 1990
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