The Canada-Brazil tax treaty requires Canada to grant a foreign tax credit for any tax paid or deemed to be paid in Brazil on, among other things, bond interest income earned in Brazil.  However, this foreign tax credit in Canada cannot “…exceed that part of the income tax as computed before the [foreign tax credit] is given, which is appropriate to the income which may be taxed in Brazil” (see Article XXII(2) of the treaty). In Societe Generale Valeurs Mobilieres Inc. v. The Queen, 2016 TCC 131, the Tax Court of Canada (TCC) interpreted the meaning of this limitation in Article XXII(2) by analyzing the ordinary meaning of the words used, the context in which the words are used, and the intention of the drafters to the treaty: see paragraphs 10 and 11;Crown Forest Industries Ltd. v. Canada, [1995] 2 S.C.R. 802 at paragraph 22; and Vienna Convention on the Law of Treaties at Article 31(1).  After a useful analysis, the TCC sided with the Crown’s interpretation of the limitation: i.e., Article XXII(2) of the treaty restricts the amount of the foreign tax credit that Canada is required to give to an amount equal to the actual Canadian income tax on that income, which is calculated on the net interest income derived from Brazil having regard to the source-computation rule contained in s. 4 of the Income Tax Act (Canada) (see paragraphs 75 and 89).