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UBC Theses and Dissertations

Canadian taxation of business and investment income of non-residents Bonzanigo, Rocco


The new Income Tax Act (S.C. 1970-71, c.63), formely known as Bill C-259, has introduced important changes and many new rules into Canadian legislation, which affect taxation of non-residents. This thesis is a study of the tax treatment which the new law imposes on non-residents and an examination of the differences from the previous system. However, taxation of non-residents depends not only on statutes but also on case law. Therefore, attention is devoted to judicial decisions to ascertain whether they conflict with the new statutory provisions. This thesis studies non-residents earning income from a business they carry on in Canada, and deriving income from investments they make in Canada. The comparatively simple situations of persons holding employments in Canada, or receiving pension payments from Canadian sources are not analyzed. The study is limited to the law normally applicable without modifications dependent on international treaties. The thesis is organized in seven main chapters and a short conclusion. The first chapter summarizes the reasons making taxation of non-residents a complexe matter, and the rules governing it. The second chapter is devoted to the definition of residence as well as to a brief comparison with certain other countries. The tax consequences of non-residents carrying on business in Canada and the methods available are examined in the third chapter. The taxation of the different forms of investment income which non-residents may derive from Canada is the object of the fourth chapter. The non-resident-owned investment corporation, that is to say the special vehicle afforded to foreign investors, is analyzed in the fifth chapter. The sixth chapter explains the technical provisions aimed at counteracting thin capitalization. The taxation of capital gains realized by non-residents is studied in the chapter seven. Finally, some conclusions are drawn in the eighth and last chapter.

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