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Unformatted text preview: usco, and all of the fair market value of the shares of Canco is derived from Canco’s business activities. The Cra stated that in these circumstances the dividends paid by Canco to usco are considered to be income derived in connection with the active trade or business of usco. This example implies that the Cra is now taking a somewhat broader view than that expressed in its initial comments at the 2008 iFa seminar.38
some light is shed on Canada’s position with respect to dividend income by the technical explanation, the technical interpretation discussed above, the 2008 round table comments, and the 2008 iFa seminar comments. still, no clear Canadian guidance indicates that in appropriate circumstances interest and other types of income earned by a resident country from a source country can be earned in connection with the active trade or business carried on in the resident country.
us guidance in this area is more helpful. several private-letter rulings confirm that interest earned by a...
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