Canadian personal income tax
With the intention to avoid double taxation with respect to taxes on income using online tax software and certain other taxes, the prevention of fiscal evasion and the assistance in online taxes an agreement between Canada and Federal Republic of Germany is made.Article 13 of this agreement deals with Tax on Capital Gain.Capital gain is an income which comes from sale or exchange of capital assets.Obviously, gain means income over purchase price and transaction cost
Article 13: Capital Gains
1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.
2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of erforming independent personal services, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such a fixed base may be taxed in that other State.
3 Gains derived by an enterprise of a Contracting State from the alienation of ships or aircraft operated, or containers used, in international traffic or movable property pertaining to the operation of such ships or aircraft, shall be taxable only in that State.
4. Gains derived by a resident of a Contracting State from the alienation of:
36pt (a) shares (other than shares listed on an approved stock exchange in the other Contracting State) forming part of a substantial interest in the capital stock of a company which is a resident of that other State the value of which shares is derived principally from immovable property situated in that other State ; or
(b) An interest in a partnership, trust or estate the value of which is derived principally from immovable property situated in the other Contracting State,may be taxed in that other State.For the purposes of this paragraph, the term "immovable property" does not include property (other than rental property) in which the business of the company, partnership, trust or estate is carried on and a substantial interest in the capital stock of a company exists when the resident and persons related thereto own 10 ;per cent or more of the shares of any class of the capital stock of a company.
5 Where a resident of a Contracting State alienates property in the course of an organization, reorganization, amalgamation, division or similar transaction and profit, gain or income with respect to such alienation is not recognized for the purpose of taxation in that State, if requested to do so by the person who acquires the property, the competent authority of the other Contracting State may agree, subject to terms and conditions satisfactory to such competent authority, to defer the recognition of the profit, gain or income with respect to such property for the purpose of taxation in that other State.
6. Gains from the alienation of any property, other than those mentioned in paragraphs 1 to 4 shall be taxable only in the Contracting State of which the alienator is a resident.
7. In the case of an individual who has been a resident of a Contracting State and who has become a resident of the other Contracting State:
( a ) the provisions of paragraph 6 shall not affect the right of either of the Contracting States to levy, according to its law, a tax on gains from the alienation of any property derived by such individual at any time during the ten years following the date on which the individual has ceased to be a resident of the first-mentioned State ;
36pt (b) where that individual is treated for the purposes of taxation in the first-mentioned State as having alienated a property and is taxed in that State by reason thereof, the individual may elect to be treated for the purposes of taxation in the other State as if the individual had, immediately before becoming a resident of that State, sold and repurchased the property for an amount equal to its fair market value at that time. However, this provision shall not apply to property any gain from which, arising immediately before the individual became a resident of that other State, may be taxed in that other State nor to immovable property situated in a third State.
Headings of all other articles of the agreement are listed below:
Article 1: Persons Covered
Article 2: Taxes Covered
Article 3: General Definitons
Article 4: Residents
Article 5: General Establishments
Article 6: Income from immovable properties
Article 7: Business Income
Article 8: Shipping and Air Transport
Article 9: Associated Enterprises
Article10: Dividends
Article 11: Interests
Article 12: Royalties
Article 13: Capital Gains
Article 14: Independent Personal Services
Article 15: Dependent Personal Services
Article 16: Directors Fees
Article 17: Artists and Sportspersons
Article 18: Pensions, Annuities and Similar Payments
Article 19: Government Service
Article 20: Students
Article 21: Other Income
Article 22: Capital
Article 23: Relief from Double Taxation
Article 24: Non-Discrimination
Article 25: Mutual Agreement Procedure
Article 26: Exchange of Information
Article 27: Assistance in Collection
Article 28: Members of Diplomatic Missions and Consular Posts
Article 29: Miscellaneous Rules
Article 30: Protocol to the Agreement
Article 31: Entry into Force
Article 32: Termination
Other Articles
