19 September 1985 Income Tax Severed Letter

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.

XXXX

G.R. White (613) 995-1178

September 19, 1985

Dear Sirs:

Re: Sale by a Non-Resident Corporation of a Canadian Resource Property

We are writing in response to your letter of July 3, 1985 and further to our telephone conversation of September 12 on which you agreed that a letter dealing in a general manner with the projected sale to prospective purchasers of a company's Canadian limited overriding royalty interests in certain mature oil and gas properties in Alberta and British Columbia would be sufficient for your purposes.

Assuming the Canadian limited overriding royalty interests described are Canadian resource properties it is the Department's view that such a property is a capital asset for the purpose of Article VIII of the Canada-U.S. Income Tax Convention (the 1942 Convention). Accordingly, where a non-resident corporation being a passive investor having no permanent establishment in Canada, realizes a gain from a sale in Canada of a Canadian resource property for its taxation year commencing on or after January 1, 1985 the provisions of Article VIII could apply to exempt the gain from Canadian taxation by virtue of the application of Article XXX(5) of the Canada-U.S. Income Tax Convention (1980)

Yours truly,

for Director General Corporate Rulings Directorate legislation Branch