The Resource Alta Energy Luxembourg SARL v R : 2018 TCC 152

Alta Energy Luxembourg SARL v R : 2018 TCC 152

Alta Energy Luxembourg SARL v R : 2018 TCC 152
Alta Energy Luxembourg SARL v R : 2018 TCC 152
  • eng
  • eng
Judgment by the Tax Court of Canada, decision date 22 August 2018. The taxpayer, Alta Energy Luxembourg S.A.R.L., was a resident of Luxembourg. It claimed an exemption from Canadian income tax under article 13(5) of the Canada-Luxembourg tax treaty in respect of a capital gain arising from the sale of shares of Alta Energy Partners Ltd, its wholly-owned Canadian subsidiary, who was engaged in the shale oil business pursuant to licenses granted by the government of Alberta. The taxpayer argued that article 13(4) of the Treaty is relevant. Under that provision, Canada has the right to tax capital gains arising from the disposition of shares where the shares derive their value principally from immovable property situated in Canada. However, the application of article 13(4) is subject to an exception. Property that would otherwise qualify as immovable property is deemed not to be such property where the business is carried on in the property (the "Excluded Property" exception). The taxpayer conceded that the shares derived their value from immovable property but that its working interest was Excluded Property. According to the tax authorities, substantially all of Alta Canada's Working Interest remained immovable property because Alta Canada drilled in and extracted hydrocarbons from only a small area of the property it controlled. Alternatively, they contended that the general anti-avoidance rule (GAAR) provided for in section 245 of the Canadian Income Tax Act (the ITA) applied to deny the benefit of the exemption provided for under article 13(5) of the Treaty. The Tax Court of Canada concluded that the GAAR does not apply to preclude the taxpayer from claiming the exemption and finally held in favour of the taxpayer
Citation source
In: International tax law reports. - London. - Vol. 21 (2018), part 2 ; p. 219-273
Geographic coverage
  • North America
  • European Union
  • Europe
Language note
Baker, P
  • case law
  • capital gains
  • exemption
  • tax treaty
  • immovable property
  • mining industry
  • GAAR
Alta Energy Luxembourg SARL v R : 2018 TCC 152

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