Words and Phrases - "means"

74
37
63
45
30
28
15
10
67
2
2
28
48
22
35
75
2
63
71
44
12
8
18
2

Canada v. Alta Energy Luxembourg S.A.R.L., 2021 SCC 49

a company resident under Luxembourg domestic law (its legal seat was there) and that was “liable to be liable to tax,” was resident there for Treaty purposes even though a conduit

In considering whether there had been a treaty-shopping abuse of the Canada-Luxembourg Treaty by virtue of the taxpayer, which had its legal seat in Luxembourg, but was a “conduit entity” without a substantial economic connection to Luxembourg, accessing a Treaty exemption for a capital gain on its disposition of a Canadian resource company, Côté J stated (at paras. 53-54-56, 58):

[T[he use of the word “means” in this provision indicates that the definition should be “construed as comprehending that which is specifically described or defined” and thus as setting out all requirements that must be met to be considered a resident under the Treaty … .

In the context of corporations, the “liable to tax” requirement is met under the Treaty where the domestic law of a contracting state exposes the corporation to full tax liability on its worldwide income because it has its residence in that state … . Being liable to tax is better understood as being “liable to be liable to tax”, meaning that taxes are a possibility, regardless of whether the person actually pays any … . Therefore, corporate residents enjoying certain tax holidays, for example on capital gains, do not automatically lose their resident status under the Treaty because they are not subject to every possible form of taxation … . This can be contrasted with fiscally transparent vehicles like partnerships that are not exempted from taxation but, rather, are not exposed to tax at all … .

[A]rt. 4(1) … expressly states that residence is to be defined by the laws of the contracting state of which the person claims to be a resident. …

[T]his preference for leaving the meaning of residence to domestic law is totally consistent with the scheme of the Treaty. …

It is worth noting that the words “sufficient substantive economic connections” are conspicuous by their absence in the text of both arts. 1 and 4. Although the GAAR invites courts to go beyond the text to understand the object, spirit, and purpose of the provisions, there are limits to this exercise, especially when attempting to discern the intent of bilateral treaty partners.

Words and Phrases
means
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) Treaty shopping to avoid capital gains tax on Canadian resource assets was contemplated, and not a Treaty abuse 660
Tax Topics - Treaties - Income Tax Conventions - Article 13 utilization of the business property exemption by a Luxembourg conduit accorded with the bargain negotiated by Canada, which was to encourage investment by such investors 605
Tax Topics - Treaties - Income Tax Conventions subsequent OECD Treaty commentary not followed 198
Tax Topics - Statutory Interpretation - Treaties additional consideration in Treaty context of giving effect to the contractual bargain 237