| September 14, 1989 | |
| Mr. Keith Hillier | Provincial and International |
| Acting Director | Relations Division |
| Non-Resident Taxation Division | J. Wilson |
| 957-2063 | |
| Attention: Joanne Sluzar | |
| HBW 9412-1 |
Information Circular 72-17R3 Sovereign Immunity
As requested by Joanne Sluzar in a meeting with our division on June 14, 1989, we have prepared a paragraph concerning sovereign immunity to be considered for inclusion during the revision of information Circular 72-17R3. If you have any questions or suggestions regarding the draft below, please call Jim Wilson at 957-2063.
General Comments
Sovereign Immunity
Under the Doctrine of Sovereign Immunity, the Government of Canada may grant exemption from tax on certain Canadian-source investment income paid or credited to the government of a foreign country. Capital gains on the disposition of taxable Canadian property may be eligible for this exemption, subject to the conditions described in paragraph 47 of Information Circular 77-16R3. Where the vendor of taxable Canadian property is a foreign government, written authorization not to pay tax in accordance with subsection 116(5) may be given to the purchaser upon request after substantiation that the property is in fact wholly-owned by that government. The request should be forwarded to:
Revenue Canada, Taxation 875 Heron Road Ottawa, Ontario K1A 0L8
Attention: Provincial and International Relations Division
C. SavageA/DirectorProvincial and InternationalRelations Division
JW/jb(Sovereign)