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.
January 20th, 1982
Mr. Allan Short General Director, Tax Policy & Legislation Branch Department of Finance 26th Floor, Place Bell Canada Ottawa, Ontario K1A 0S5
Dear Sir:
We are solicitors for XXXX
Although it was our view that this gain was not taxable under the Canada/U.K. treaty, in order to satisfy the closing docu- mentation on the sale, an undertaking was given to the Department by this office to withhold the amount of tax that might be claimed on the gain if it were taxable and in exchange for such undertaking a Certificate under Section 116 of the Income Tax Act was obtained to satisfy the solicitors for the purchaser on closing. These funds are presently retained by us and in discussions with Kevin Donnelly, who is with the rulings Division of the Income Tax Department in Ottawa, we reviewed with him the possibility of obtaining some clarification of the effect of Article XIII, para- graph 4(a) of the Tax Convention with the United Kingdom on our client's transaction. Mr. Donnelly advised that we should write to you in this connection.
It is our understanding that the Convention article above referred to is intended to tax those gains from the sale of shares of companies who are primarily in the real estate investment business or whose assets are primarily real estate. We do not think that the article is intended to cover sale of shares of a company who is strictly in the manufacturing field and who happened to own its plant facility The latter situation describes the Hardchrone situation.
We would very much appreciate your views in this regard and your advice as to the most expedient way to resolve the matter.
We look forward to hearing from you.
Yours very truly,
XXXX
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