28 July 1982 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.

July 28,1982

TORONTO DISTRICT OFFICE

K.C. McLean Chief of Audit

HEAD OFFICE Non-Corporate Rulings Division Peter E. Salvatori

XXXX

Article 13(4), Canada-UK Treaty (1978)

XXXX

We are forwarding herewith an exchange of correspondence between Mr. R.A. Short, of the Department of Finance, and XXXX law firm, which has to do with the interpretation of Article 13(4) of the current Canada-UK treaty and its possible application to the sale of shares referred to therein.

The valuation of certain "immoveable property" located in Toronto is key to the determination of whether the treaty exemption is applicable. In this context, the Department has taken the expression "greater part of their value" used in Article 13(4)(a) of the Convention to mean more than 50% of their value.

You will note that the Department of Finance does not agree with XXXX interpretation of the scope of the treaty exemption. Accordingly, unless the taxpayer is able to show that the greater part of the value of the shares derived from assets other than the immoveables (including land, buildings and fixtures), the gain on the sale would not be entitled to exemption under the treaty.

We have informed XXXX that this file has been transferred to you, and XXXX has requested that your office be in touch with him at your earliest convenience.

If we can be of any assistance in this regard, please advise.

for Director Non-Corporate Rulings Division