The appellant corporation, originally resident in the Netherlands, appealed a reassessment of a capital gain realized on the sale of a partnership interest in 2009.
The Federal Court of Appeal had previously affirmed the Tax Court's finding that the appellant was a resident of Canada in 2009 but remitted the matter for reconsideration of the application of subsection 128.1(1) of the Income Tax Act and the Canada-Netherlands Income Tax Convention.
On redetermination, the Tax Court held that the appellant became a resident of Canada in 1998, before acquiring the partnership interest, meaning subsection 128.1(1) did not apply to step up its cost base.
The Court also held that the appellant failed to prove it was subject to comprehensive taxation in the Netherlands, and thus the treaty exemption for capital gains did not apply.
The appeal was dismissed.
