8 September 1980 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.

SEP 08 1980

M0NTREAL DISTRICT OFFICE

XXXX Business Audit Section 31-1

HEAD OFFICE C. MacNab (613) 995-1327

XXXX

This is in reply to your memorandum dated April 9, 1980 in respect of the above-mentioned taxpayers.

We agree with your position regarding the non application of paragraph 2 of Article XXIII of the Canada-Israel Tax Convention) to the XXXX on the facts as outlined by you in respect of that corporation's 1978 and 1979 taxation years as follows:

XXXX

Also, since the dividend received by XXXX is its 1978 taxation year is fully deductible by that corporation under sub- sections 113(1) and 91(5) of the Act, there would be no double tax and paragraph 1(a) and section 2 of Article XXIII of the Convention would not apply.

While it may be that if the taxpayer had arranged its affairs differently, the FAPI rules would not have applied so that there would have been deductions available to it by virtue of the Convention, we must apply the Act to the facts as they existed in the corporation's 1978 and 1979 taxation years and it would not be appropriate in our view to take a different view of those facts.

B.G.M BUETOW

Chief Corporate Reorganizations Section Specialty Corporations Rulings Division Corporate Rulings Directorate Legislation Branch