,canada ,cu/oms                       #a
& ,rev5ue ,ag5cy

          ,9t]pret,n ,bullet9
    
,subject3 ,9come ,tax ,act
  ,capital ,ga9s ,deriv$ 9 ,canada
  0,resid5ts (! ,unit$ ,/ates
,numb]3 ,,it-#agc;,r#b
,date3 ,janu>y #cj1 #aihi
,ref];e3 ,>ticle ,,xiii (! #aihj
  ,canada-,unit$ ,/ates ,9come ,tax
  ,3v5;n 7al sec;n #aae.a (! ,act &
  ,>ticles ;,v & ,,vi1 p>agraph #b7c7 (
  ,>ticle ,,xxiv & p>agraph #e ( ,>ticle
  ,,xxx (! #aihj ,3v5;n & ,>ticle ,,viii
  (! #aidb ,3v5;n74

               ,applic,n
    
  ,? bullet9 replaces & c.els ,9t]pret,n
,bullet9 ,,it-#agc;,r dat$ ,july #g1
#aige &! ,special ,rel1se dat$ ,janu>y
#ae1 #aihf4
                                      #a
                ,summ>y              a#a
    
  ,? bullet9 d1ls )! tax tr1t;t
0,canada1 pursuant 6! t]ms (! #aihj
,canada-,unit$ ,/ates ,9come ,tax ,3v5;n
7"h9af ! 8#aihj ,3v5;n071 ( ga9s deriv$
0a resid5t (! ,unit$ ,/ates f ! ali5,n (
c]ta9 prop]ty situat$ 9 ,canada4 ,x
4cusses ! g5]al rule & excep;ns p]ta9+
6tax+ capital ga9s deriv$ 9 ,canada
3ta9$ 9 ,>ticle ,,xiii (! #aihj ,3v5;n4
,:ile ? bullet9 is writt5 prim>ily
6expla9 c]ta9 aspects ( ,canadian tax,n
(a resid5t (! ,unit$ ,/ates1 !
reciprocal nature (! #aihj ,3v5;n r5d]s
xs ,>ticle ,,xiii applica# 6tax,n 0!
,unit$ ,/ates ( ga9s deriv$ 0a resid5t (
,canada f ! ali5,n ( prop]ty locat$ 9 !
,unit$ ,/ates4

          ,4cus.n & ,9t]pret,n
    
#a4 ,subject 6! excep;n expla9$ 9 #ae
  2l1 ! #aihj ,3v5;n applies 6ga9s
  deriv$ 9 tax,n ye>s -m5c+ on or     #b
             ,,it-#agc;,r#b          b#a
  af ,janu>y #a1 #aihe4 ,! g5]al rule 9
  ! #aihj ,3v5;n reg>d+ ! tax,n ( ga9s f
  ! ali5,n ( any prop]ty is t s* ga9s >e
  taxa# only 9 ! /ate ( resid5cy (!
  ali5ator4 ,excep;ns 6? g5]al rule >e
  f.d 9 p>agraphs #a1 #b1 #c & #e (
  ,>ticle ,,xiii (! #aihj ,3v5;n & >e
  4cuss$ 9 #b 6#i 2l4 ,! t]m 8ali5,n0
  us$ 9 ,>ticle ,,xiii (! #aihj ,3v5;n
  m1ns sales1 ex*anges & o!r 4posi;ns or
  deem$ 4posi;ns 7e4g4 *ange ( use1
  gifts1 4tribu;ns1 d1?7 t give rise
  6actual or deem$ proce$s1 all or "p (
  : >e subject 6tax,n 9 ,canada4

             ,r1l ,prop]ty
    
#b4 ,ga9s deriv$ 0a ,u4,s4 resid5t f !
  ali5,n ( r1l prop]ty situat$ 9 ,canada
  may1 0virtue ( p>agraph #a ( ,>ticle
  ,,xiii (! #aihj ,3v5;n1 2 subject


                                      #c
             ,,it-#agc;,r#b           #b
  6tax 9 ,canada4 8,r1l prop]ty situat$
  9 ,canada0 is def9$ 9 p>agraph #c7b7 (
  ,>ticle ,,xiii z foll[s3
  7a7 r1l prop]ty1 ref]r$ 6in ,>ticle
    ,,vi (! #aihj ,3v5;n1 situat$ 9
    ,canada4 ,>ticle ,,vi (! #aihj
    ,3v5;n g5],y provides t s* r1l
    prop]ty has ! same m1n+ : x has "u !
    ,canadian ,9come ,tax ,act & 9cludes
    any op;n or simil> "r 9 respect ( s*
    prop]ty4 ,:ile n an exhau/ive li/+1
    r1l prop]ty 9cludes usufruct ( r1l
    prop]ty1 "rs 6explore = or 6exploit
    m9]al deposits1 s\rces & o!r natural
    res\rces & "rs 6am.ts -put$ 0ref];e
    6! am.t or value ( produc;n f s*
    res\rces1
  7b7 a %>e (! capital /ock (a -pany ":
    ! %>e's value is deriv$ pr9cip,y f
    r1l prop]ty situat$ 9 ,canada1
  7c7 an 9t]e/ 9 a "pn]%ip1 tru/ or
    e/ate ! value ( : is deriv$ pr9cip,y
    f r1l prop]ty situat$ 9 ,canada4
                                      #d
             ,,it-#agc;,r#b          a#b
  ,! phrase 8pr9cip,y f r1l prop]ty
  situat$ 9 ,canada0 9 7b7 & 7c7 abv
  m1ns t m ?an #ej@3p (! value (! %>e or
  9t]e/ is deriv$ f r1l prop]ty situat$
  9 ,canada :e!r [n$ directly or
  9directly 0! -pany1 "pn]%ip1 tru/ or
  e/ate4 ,?us1 ! tax,n 9 ,canada is
  pres]v$ "? s"eal ti]s ( 5tities if !
  value (! -pany's %>es or ! "pn]%ip1
  tru/ or e/ate is ultimately dep5d5t
  pr9cip,y ^u r1l prop]ty situat$ 9
  ,canada4

           ,p]sonal ,prop]ty
    
#c4 ,ga9s deriv$ 0a resid5t (! ,unit$
  ,/ates f ! ali5,n ( p]sonal prop]ty >e
  taxa# 9 ,canada if ! ali5at$ prop]ty
  7a7 0 "p (! busi;s prop]ty (a p]man5t
    e/abli%;t : ! resid5t (! ,unit$
    ,/ates has 9 ,canada or _h 9 ,canada
    )9 ! #ab mon? p]iod prec$+ ! date (
    ali5,n1 or
                                      #e
             ,,it-#agc;,r#b          b#b
  7b7 p]ta9$ 6a fix$ base : is availa#
    6! ,unit$ ,/ates resid5t 9 ,canada
    =! purpose ( p]=m+ 9dep5d5t p]sonal
    s]vices or : 0 s availa# )9 ! #ab
    mon? p]iod prec$+ ! date ( ali5,n4
  ,^! rules apply al 6ga9s deriv$ :5 !
  p]man5t e/abli%;t or fix$ base has xf
  be5 ali5at$4 ,! t]ms 8p]man5t
  e/abli%;t0 & 8fix$ base0 >e def9$ 9 #d
  6#h 2l = purposes (! #aihj ,3v5;n4

          ,p]man5t ,e/abli%;t
    
#d4 ,! t]m 8p]man5t e/abli%;t0 z us$ 9
  #c7a7 abv is def9$ 9 ,>ticle ;,v (!
  #aihj ,3v5;n z m1n+ a fix$ place (
  busi;s "? : ! busi;s (a resid5t (!
  ,unit$ ,/ates is c>ri$ on 9 ,canada
  9clud+ specific,y
  7a7 a place ( manage;t1
--------------------------------------#c
  7b7 a bran*1
  7c7 an (fice1
  7d7 a factory1                      #f
             ,,it-#agc;,r#b          a#c
  7e7 a "w%op1
  7f7 a m9e1 an oil or gas well1 a qu>ry
    or any o!r place ( extrac;n (
    natural res\rces1
  7g7 a build+ site or 3/ruc;n or
    9/all,n project la/+ m ?an #ab mon?s
    9 dur,n1
  7h7 ! use =a p]iod ( m ?an #c mon?s 9
    any #ab mon? p]iod1 ( an 9/all,n or
    drill+ rig or %ip 9 ,canada 6explore
    = or exploit natural res\rces1 &
  7i7 a p]son 7o!r ?an an ag5t (
    9dep5d5t /atus 6:om #f 2l applies7
    act+ 9 ,canada on 2half (a resid5t
    (! ,unit$ ,/ates if t p]son has !
    au?or;y1 & habitu,y ex]cises x 9
    ,canada1 63clude 3tracts 9 ! "n (!
    resid5t (! ,unit$ ,/ates4
#e4 ,! t]m 8p]man5t e/abli%;t0 does n
  9clude a fix$ place ( busi;s us$
  solely =1 or a p]son describ$ 9 #d7i7
  abv 5gag$ solely in1 "o or m (! foll[+
  activities3
                                      #g
             ,,it-#agc;,r#b          b#c
  7a7 ! use 9 ,canada ( facilities =!
    purpose ( /orage1 4play or deliv]y (
    gds or m]*&ise 2l;g+ 6a resid5t (!
    ,unit$ ,/ates1
  7b7 ! ma9t5.e 9 ,canada (a /ock ( gds
    or m]*&ise 2l;g+ 6a resid5t (!
    ,unit$ ,/ates1 = any "o (! purposes
    describ$ 9 7a7 or =! purpose (
    process+ 0ano!r p]son1
  7c7 ! pur*ase ( gds or m]*&ise1 or !
    collec;n ( 9=m,n1 =a resid5t (!
    ,unit$ ,/ates1
  7d7 adv]tis+1 ! supply ( 9=m,n1
    sci5tific rese>* or simil>
    activities : h a prep>atory or
    auxili>y "*1 =! resid5t (! ,unit$
    ,/ates4
#f4 ,! c>ry+ on ( busi;s 9 ,canada 0a
  resid5t (! ,unit$ ,/ates % n 2 deem$
  6be a p]man5t e/abli%;t 9 ,canada
  m]ely 2c s* busi;s is c>ri$ on "? a
  brok]1 g5]al -mis.n ag5t or any o!r
  ag5t ( an 9dep5d5t /atus if s* p]sons
                                      #h
             ,,it-#agc;,r#b          c#c
  >e act+ 9 ! ord9>y c\rse ( c>ry+ on _!
  busi;s4
#g4 ,! fact t a -pany : is a resid5t (!
  ,unit$ ,/ates 3trols or is 3troll$ 0a
  -pany : is a resid5t ( ,canada or :
  c>ries on busi;s 9 ,canada 7:e!r "? a
  p]man5t e/abli%;t or o!rwise71 does n
  r5d] "o -pany a p]man5t e/abli%;t (!
  o!r4

              ,fix$ ,base
    
#h4 ,! t]m 8fix$ base0 z us$ 9 ,>ticle
  ,,xiii (! #aihj ,3v5;n 7see #c7b7 abv7
  is n def9$ 9 ! #aihj ,3v5;n1 b x is
  9t5d$ 6relate 6! place
--------------------------------------#d
  ": 9dep5d5t p]sonal s]vices1 r ?an
  9du/rial or -m]cial activities1 >e
  p]=m$4 ,a 8fix$ base0 wd 9clude1 =
  example1 a physician's 3sult+ room1 !
  (fice ( an >*itect or ! (fice (a
  lawy]4 ,x wd n 2 uncommon = s* a 8fix$
  base0 6be locat$ at ! place 9       #i
             ,,it-#agc;,r#b          a#d
  ,canada ": a resid5t (! ,unit$ ,/ates
  /ays tempor>ily & p]=ms 9dep5d5t
  p]sonal s]vices :ile 9 ,canada4 ,h["e1
  ! ,de"p;t has tak5 ! posi;n t an
  9dividual w n 2 3sid]$ 6h a fix$ base
  if ! p]iod 9 ,canada = p]=m+ !
  9dep5d5t p]sonal s]vices is less ?an
  #fa "ds &! s]vices 9 ,canada >e n
  p]=m$ on a recurr+ basis4 ,a review (!
  facts 9 ea* case w 2 nec 6e/abli% :e!r
  a fix$ base exi/s ": ! p]iod 9 ,canada
  = p]=m+ ! s]vices provid$ is = m ?an
  #fj "ds or ": ! s]vices 9 ,canada >e
  p]=m$ on a recurr+ basis4
#i4 ,p>agraph #e ( ,>ticle ,,xiii
  provides ano!r excep;n 6! g5]al rule
  ref]r$ 6in #a abv4 ,? p>agraph res]ves
  ! "r ( ,canada 6tax an 9dividual :o is
  a resid5t (! ,unit$ ,/ates on ga9s f !
  ali5,n ( any prop]ty if ! 9dividual
  7a7 0 a resid5t ( ,canada = #abj mon?s
    dur+ any p]iod ( #bj 3secutive ye>s
    prior 6! ali5,n (! prop]ty1
                                     #aj
             ,,it-#agc;,r#b          b#d
  7b7 0 a resid5t ( ,canada at any "t
    dur+ ! #aj ye>s immly prior 6!
    ali5,n (! prop]ty1 &
  7c7 [n$ ! prop]ty at ! "t ( c1s+ 6be a
    resid5t ( ,canada4
  ,! excep;n describ$ abv al p]mits
  ,canada 6tax ga9s on ! 4posi;n ( c]ta9
  replace;t prop]ty acquir$ 9 sub/itu;n
  =a prop]ty describ$ 9 7c7 abv if !
  replace;t prop]ty 0 acquir$ 9 an
  ali5,n transac;n ! ga9 on : 0 n
  recogniz$ = tax,n 9 ,canada 7e4g4
  tax,n (! ga9 0 def]r$74 ,p>agraph
  #b7c7 ( ,>ticle ,,xxiv (! #aihj ,3v5;n
  5titles an 9dividual 6a =eign tax
  cr$it = 9come taxes pd or a3ru$ 6!
  ,unit$ ,/ates on ga9s t wd n 2 taxa# 9
  ,canada except =! provi.ns ( p>agraph
  #e ( ,>ticle ,,xiii (! #aihj ,3v5;n4
#aj4 ,": a resid5t (! ,unit$ ,/ates
  ali5ates prop]ty 9 ! c\rse (a
  corporate organiz,n1 reorganiz,n1
  amalgam,n1 divi.n or simil> transac;n
  &! pr(it1 ga9 or 9come >is+ f !    #aa
             ,,it-#agc;,r#b          c#d
  ali5,n is n recogniz$ = 9come tax
  purposes 0! ,unit$ ,/ates b is s
  recogniz$ 0,canada1 p>agraph #h (
  ,>ticle ,,xiii (! #aihj ,3v5;n
  provides a m1ns ":by d\# tax,n may 2
  avoid$ 0def]r+ recogni;n 9 ,canada (!
  pr(it1 ga9 or 9come4 ,6a*ieve s* a
  def]ral1 ! p]son or "pn]%ip :o
  acquires t prop]ty &! v5dor m/ peti;n
  ! -pet5t au?or;y 9 ,canada 6def] !
  tax,n 7see #aa 2l74 ,if ! ,canadian
  -pet5t au?or;y a3$es 6! reque/1 an
  agree;t m/ 2 5t]$ 962t t
--------------------------------------#e
  au?or;y &! peti;n]s "u : ! def]ral (
  tax,n w 2 9 e6ect = s* "t & "u s* o!r
  3di;ns z >e /ipulat$ 9 ! agree;t4
  ,s9ce ! purpose ( p>agraph #h (
  ,>ticle ,,xiii (! #aihj ,3v5;n is
  6avoid d\# tax,n1 relief w only 2
  grant$ 6! ext5t nec 6avoid s* d\#
  tax,n4 ,? provi.n is only applica# ":
  ali5,ns1 9 ! circum/.es /at$1 result 9
  a net ga9 7i4e4 ga9s exce$         #ab
             ,,it-#agc;,r#b          a#e
  losses74 ,! 8-pet5t au?or;y0 9 ,canada
  is ! ,m9i/] ( ,n,nal ,rev5ue or !
  ,m9i/]'s au?oriz$ repres5tative4
  ,pl1se ref] 6! curr5t issue ( ,9=m,n
  ,circul> #ga-ag ) respect 6reque/s =
  -pet5t au?or;y 3sid],n4
#aa4 ,= tax,n ye>s -m5c+ af #aihd1 sec;n
  #aae.a provides rules =a tax def]ral
  ": a transac;n describ$ 9 #aj abv has
  tax-def]r$ /atus 9 ! ,unit$ ,/ates b
  does n h s* a /atus 9 ,canada4 ,! am.t
  agre$ on 9 respect (! prop]ty 9 an
  agree;t 2t ! ,canadian -pet5t au?or;y1
  ! v5dor &! pur*as] w be1 = purposes (!
  ,act1 ! v5dor's proce$s ( 4posi;n (!
  prop]ty &! pur*as]'s co/ (! prop]ty4
  ,": ! prop]ty is deprecia# prop]ty1
  p>agraph #aae.a7d7 pres]ves xs tax
  base 9 ,canada4 ,p>agraph #aae.a7e7
  ma9ta9s ! "*iz,n (! prop]ty 9 ,canada4
  ,x w 2 nec =! v5dor & pur*as] (!
  prop]ty 6jo9tly elect 9 prescrib$ =m &
  )9 ! prescrib$ "t 9 ord] 6h sec;n
  #aae.a apply4 ,an agree;t "u       #ac
             ,,it-#agc;,r#b          b#e
  p>agraph #h ( ,>ticle ,x#aaa (! #aihj
  ,3v5;n )! ,canadian -pet5t au?or;y w
  require ! v5dor & pur*as] 6make a
  valid elec;n "u sec;n #aae.a4

           ,transi;nal ,rules
    
#ab4 ,p>agraph #i ( ,>ticle ,,xiii (!
  #aihj ,3v5;n provides a transi;nal
  rule reflect+ ! fact t1 "u ,>ticle
  ,,viii (! #aidb ,canada-,unit$ ,/ates
  ,9come ,tax ,3v5;n 7"h9af ! 8#aidb
  3v5;n071 ga9s deriv$ 0a resid5t or
  corpor,n or o!r 5t;y (! ,unit$ ,/ates
  f ! sale or ex*ange ( capital assets
  locat$ 9 ,canada 7 exempt f tax 9
  ,canada provid$ t s* resid5t or
  corpor,n or o!r 5t;y did n h a p]man5t
  e/abli%;t 9 ,canada at any "t 9 !
  tax,n ye> dur+ : ! sale or ex*ange
  o3urr$4 ,p>agraph #i ( ,>ticle ,,xiii
  (! #aihj ,3v5;n exempts f tax 9
  ,canada ! por;n1 if any1 (a capital
  ga9 deriv$ 0a p]son resid5t 9 !    #ad
             ,,it-#agc;,r#b          c#e
  ,unit$ ,/ates f ! ali5,n (a capital
  asset locat$ 9 ,canada t _h a3ru$ dur+
  a p]iod 5d+ on ,decemb] #ca1 #aihd
  provid$ t s* p]son ei
  7a7 [n$ ! asset on ,septemb] #bf1
    #aihj & 0 a resid5t (! ,unit$ ,/ates
    on ,septemb] #bf1 #aihj & at all "ts
    af t date until ! ali5,n1 or
  7b7 acquir$ ! asset 9 a transac;n :
    qualifi$ z a non-recogni;n transac;n
    7see #ac 2l7 = ,canadian tax
    purposes4
--------------------------------------#f
  ,p>agraph #i ( ,>ticle ,,xiii does n
  apply to

  7c7 an asset t1 on ,septemb] #bf1
    #aihj1 ei =m$ "p (! busi;s prop]ty
    (a p]man5t e/abli%;t or p]ta9$ 6a
    fix$ base 9 ,canada (a resid5t (!
    ,unit$ ,/ates4
  7d7 an ali5,n 0a resid5t (! ,unit$
    ,/ates ( an asset t 0 [n$ at any "t
    af ,septemb] #bf1 #aihj & 2f     #ae
             ,,it-#agc;,r#b          a#f
    s* ali5,n 0a p]son :o 0 n at all "ts
    af t date :ile ! asset 0 [n$ 0s*
    p]son a resid5t (! ,unit$ ,/ates1 or
  7e7 an ali5,n ( an asset t 0 acquir$
    0a p]son at any "t af ,septemb] #bf1
    #aihj & 2f s* ali5,n 9 a transac;n
    o!r ?an a non-recogni;n transac;n4
#ac4 ,a 8non-recogni;n transac;n0 =
  purposes ( p>agraph #i ( ,>ticle
  ,,xiii (! #aihj ,3v5;n 7see #ab abv7
  is a transac;n 9 : a ga9 result+
  "!from is1 9 e6ect1 def]r$ = tax
  purposes b is n p]man5tly =giv54 ,a
  transac;n t is giv5 a non-recogni;n
  /atus 0! ,canadian -pet5t au?or;y 9
  a3ord.e ) p>agraph #h ( ,>ticle ,,xiii
  (! #aihj ,3v5;n 7see #aj abv7 is a
  8non-recogni;n transac;n0 = purposes (
  p>agraph #i (! ,>ticle4
#ad4 ,9 apply+ ! transi;nal rules
  expla9$ 9 #ab abv1 ! ga9 is assum$
  6a3rue pro-rata ov] ! p]iod ( [n]%ip
  &! por;n (! ga9 : a3ru$1 prior
  6,janu>y #a1 #aihe is calculat$    #af
             ,,it-#agc;,r#b          b#f
  on a mon?ly basis4 ,? pro-rata me?od
  m/ 2 us$ un.s x c 2 %[n 6! satisfac;n
  (! ,canadian -pet5t au?or;y t a grt]
  por;n (! ga9 0 attribut$ 6! p]iod 5d+
  ,decemb] #ca1 #aihd : is usu,y
  a3ompli%$ 0hav+ ! prop]ty apprais$ z (
  ,decemb] #ca1 #aihd4 ,a taxpay] :o
  wants 6make ? alt]nate %[+ = ,canadian
  tax purposes m/ s 9dicate on !
  taxpay]'s ,canadian 9come tax return
  =! tax,n ye> 9 : ! ali5,n took place &
  m/ atta* 6! return a /ate;t describ+ !
  relevant evid;e4 ,! ,canadian -pet5t
  au?or;y or au?oriz$ repres5tative w
  det]m9e :e!r ! taxpay] has satisfi$ !
  require;ts ( p>agraph #i ( ,>ticle
  ,,xiii (! #aihj ,3v5;n4

      ,example ( ,pro-,rata ,me?od
    
  ,an 9dividual resid5t (! ,unit$ ,/ates
acquir$ r1l prop]ty situat$ 9 ,canada on
,janu>y #a1 #aigh = 4#ajj1jjj4
                                     #ag
             ,,it-#agc;,r#b          c#f
  ,! prop]ty 0 sold ,april #cj1 #aihf =
4#aej1jjj4
--------------------------------------#g
  ,! capital ga9 ( 4#ej1jjj o!rwise
det]m9$ = ,canadian tax,n purposes is
reduc$ 0p>agraph #i ( ,>ticle ,,xiii (!
#aihj ,3v5;n z foll[s3

,capital ga9 """""""""""""""""" 4#ej1jjj
,numb] ( mon?s prop]ty [n$ """""""" #ajj
,numb] ( mon?s prop]ty [n$
  prior 6,janu>y #a1 #aihe """"""""" #hd
,ga9 exclud$ f ,9come #hd
  divid$ 0#ajj multipli$
  04#ej1jjj equals """""""""""" 4#db1jjj
,ga9 subject 6tax,n 9 ,canada
  74#ej1jjj m9us 4#db1jjj7
  equals """"""""""""""""""""""" 4#h1jjj
,taxa# capital ga9 "o-half (
  4#h1jjj """""""""""""""""""""" 4#d1jjj

#ae4 ,0virtue ( p>agraph #e ( ,>ticle
  ,,xxx (! #aihj ,3v5;n1 if ,>ticle
  ,,viii (! #aidb 3v5;n wd h af=d$   #ah
             ,,it-#agc;,r#b          a#g
  grt] relief f tax on capital ga9s ?an
  does ! #aihj ,3v5;n1 ,>ticle ,,viii wd
  3t9ue 6h full =ce & e6ect until ! 5d
  (! f/ tax,n ye> (a resid5t (! ,unit$
  ,/ates : -m;ed on or af ,janu>y #a1
  #aihe4 ,>ticle ,,viii (! #aidb 3v5;n
  provid$ a full tax exemp;n = capital
  ga9s :ile x 0 9 =ce if ! 3di;ns relat+
  6! ,>ticle1 describ$ 9 #ab abv1 7 met4














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