Dear Sirs:
We are writing in response to your letter dated April 26, 1991 wherein you requested our comments on the interpretation of paragraph 115(1)(b) of the Income Tax Act (Canada)(the "Act").
You are uncertain as to whether or not shares of a non-resident owned investment corporation ("NR0") which does not own any of the properties referred to in clauses 115(1)(b)(v)(A) to (D) of the Act on the first day of its taxation year in which a disposition of its shares takes place would qualify as "taxable Canadian property".
We are of the view that the shares of an NR0 would not qualify as "taxable Canadian property" for purposes of the Act where the NRO did not own any of the properties referred to in clauses 115(1)(b)(v)(A) to (D) of the Act on the first day of its taxation year. It is our interpretation that the words which follow subparagraph 115(1)(b)(ix) of the Act relate to the list of properties which qualify as "taxable Canadian property" and do not relate back to the words preceding subparagraph 115(1)(b)(i) of the Act.
The foregoing comments represent our general views with respect to the subject matter of your letter. As indicated in paragraph 21 of Information Circular 70-6R2, this is not an advance income tax ruling and is, therefore, not binding on the Department.
Yours truly,
for DirectorReorganizations and Non-Resident DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch