A non-resident inherited a royalty entitlement to a percentage of the net proceeds of sales from a Quebec gold mine, and then sold the royalty to the mining company for a lump sum. At issue was whether the taxable capital gain was excluded from being income earned in a province for purposes of s. 120(1) on the basis of the Income Earned in Quebec Income Tax Remission Order, 1988, which relevantly excluded “taxable income earned in Canada for the year by virtue of subparagraph 115(1)(a)(iii) of the Act from dispositions of … real property situated in the province.” In finding that the remission was not available, the Directorate stated:
[A] "Canadian resource property" does not constitute a TCP. A taxable capital gain from the disposition of a "Canadian resource property" is therefore not included pursuant to subparagraph 115(1)(a)(iii) … .
[Furthermore] … it is highly doubtful that the Right can be considered real property … . Article 900 of the Civil Code of Québec, which states that "fruits and other products of the soil may be considered to be movables … when they are the object of an act of alienation,” leads us to believe that the Right would not constitute immovable property but rather movable property.