Unformatted text preview: ital gains.
as previously mentioned, the Cra further indicated that it would consider the interpretive approach adopted by the united states. unfortunately, because a nonresident that disposes of shares of a us company is not subject to us income tax on any gain unless the shares are us real property, no us interpretive guidance is available.
During the 2008 round table, the Cra provided an example in which a uK parent company owns all of the shares of usco, which in turn owns all of the shares of Canco. The Cra confirmed that the active trade or business exception is available to usco if usco has a substantial active business in the united states, Canco carries on an active business that is the same as or complementary to the business carried on in the united states, and
n all of the value of the shares of Canco is attributable to its active business.
n While these comments confirm that capital gains may qualify as income that is derived in connection with an active trade or business in applying article xxix a(3), the limited ability to rely on this exception creates great uncertainty. For example, suppose that Canco carries on more than one business and that not all of the active trade or business activities of Canco are complementary to the active trade or business activities of usco. in these circumstances, is i...
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