The Resource Société Générale Valeurs Mobilières v R : 2017 FCA 3

Société Générale Valeurs Mobilières v R : 2017 FCA 3

Label
Société Générale Valeurs Mobilières v R : 2017 FCA 3
Title
Société Générale Valeurs Mobilières v R : 2017 FCA 3
Contributor
Subject
Language
eng
Summary
Judgment by the Federal Court of Canada, decision date 10 January 2017. In this judgment the Federal Court of Appeals has upheld the decision of the Tax Court of Canada from 26 May 2016 on the computation of the foreign tax credit in accordance with the Canada-Brazil double taxation convention. The taxpayer was a Canadian company which derived interest income from an investment in Brazil (reported in (2016) 18 ITLR 889). Under the Canada-Brazil double taxation convention, Brazil was permitted to tax the interest at up to 20 per cent of the gross income. The taxpayer was then permitted to make a deduction from its income tax in Canada in respect of tax paid in Brazil. That deduction was limited to "that part of the income tax as computed before the deduction is given, which is appropriate to the income which may be taxed in Brazil". The taxpayer claimed that this meant that it could deduct the amount of tax paid in Brazil on the gross income. The Revenue contended that it meant that the deduction was limited to the amount of Canadian income tax that would have been payable on that amount of income, i.e. net of deductions. This case deals with the application of the 'normal' limitation on the amount of foreign tax credit where the foreign (in this case, Brazilian) tax is imposed on the gross income, but the foreign source income comes into a computation of net income in the country of residence of the recipient (Canada in this case). There are two slightly unusual features. First, the interest article in the Brazil-Canada convention provided for a maximum 15 per cent tax in Brazil on interest, but the elimination of double taxation article provided a form of tax sparing where the Brazilian tax was deemed to be 20 per cent of the gross interest. Secondly, the credit provision made no reference to the operation of Canadian domestic law
Citation source
In: International tax law reports. - London. - Vol. 21 (2018), part 2 ; p. 137-141
Geographic coverage
  • North America
  • Latin America
  • South America
Language note
English
http://library.link/vocab/relatedWorkOrContributorName
Baker, P
http://library.link/vocab/subjectName
  • case law
  • foreign tax credit limitation
  • treaty interpretation
  • interest
  • tax treaty
  • tax sparing credit
Label
Société Générale Valeurs Mobilières v R : 2017 FCA 3
Instantiates
Publication
Label
Société Générale Valeurs Mobilières v R : 2017 FCA 3
Publication

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