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.
Revenue Canada Taxation Head Office
XXXX
B. Tenborg Room 250 292-4182
Attention: XXXX
January 29, 1988
XXXX
Re: XXXX
Thank you for your letter of January 21, 1988.
Please be advised that paragraph 9 of Article 13 of the Canada - U.S. Tax Treaty refers to the alienation of a "capital asset". As "Capital Asset" is not defined in the Convention, it is to be interpreted in accordance with the Income Tax Act. Under the Income Tax Act, the definition of "capital property" excludes a resource property.
Accordingly, paragraph 9 of Article 13 cannot be applied to exempt a portion of the income resulting from the disposition of Canadian Resource property. This income would be taxed under Article 6 of Canada - U.S. Tax Treaty.
While this conclusion was not contained in the opinion we received from XXXX we have, in the past, clarified this matter with other auditors in that division and the treatment of this income has become rather common place in our assessments.
As a result, I assumed you were also aware of the appropriate treatment of this income and I apologize for not explaining this more clearly in my letter of January 18, 1988.
Thank you again for your prompt attention to this matter.
Yours truly,
Enquiries and Office Examinations BT/gp
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