1 / 7

Case Study 2 MIL (INVESTMENTS) SA V CANADA 2006 TCC 460

Case Study 2 MIL (INVESTMENTS) SA V CANADA 2006 TCC 460. FACTS. Cayman Ltd a subsidiary of Assessee holds 11.9% share in Canada Ltd. Canadian Co.’s share appreciates owing to mineral find. July, 1995 Cayman Ltd. is converted in Luxembourg as Lux Co.

oke
Download Presentation

Case Study 2 MIL (INVESTMENTS) SA V CANADA 2006 TCC 460

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Case Study 2 MIL (INVESTMENTS) SA V CANADA 2006 TCC 460

  2. FACTS • Cayman Ltd a subsidiary of Assessee holds 11.9% share in Canada Ltd. • Canadian Co.’s share appreciates owing to mineral find. • July, 1995 Cayman Ltd. is converted in Luxembourg as Lux Co.

  3. Facts (contd..) • Aug, 1996 Lux Co. sold shares of Canada Co. • Lux Co. claimed exemption in Canada under A.13 of Canada – Luxembourg DTAA. • Under domestic Luxembourg Law, there is no capital gains arising in this transaction.

  4. Parent Co. 100 % 100 % Cayman Ltd. Conversion Lux Co. (assessee) Shares in Canada Co. sold Canada Co.

  5. Issues • Whether capital gains will be taxable in Canada applying the Anti avoidance rule under the Canadian Law to ignore the transfer of Cayman Ltd. to Lux Co.? • Whether there is an anti avoidance rule which is inherent in the Canada – Luxembourg DTAA?

  6. Held • Commercial transactions without any particular tax motive and carried out in such a manner to achieve least unfavorable tax consequence is not avoidance. • It could not be shown that that the sale was intended when the first transaction was entered into. Therefore, it was not a part of the series of transaction.

  7. Held • Nothing in the treaty can be construed as containing an inherent anti abusive rule especially when both Canada and Luxembourg have domestic anti avoidance rules and have not specifically included it in the treaty.

More Related