In 2013-0512581E5, a Canadian company (Canco) sold shares of a Brazilian company (BrazilCo). The resulting gain was taxed in Brazil. The CRA said a foreign tax credit (FTC) would not be available to Canco under s. 126(1) because the gain was sourced to Canada, not Brazil (the sale contract was negotiated, signed, and executed in Canada and payment was made in Canada). However, the CRA said the gain was deemed to be sourced to Brazil under paragraph 2 of Article 22 of the Canada-Brazil tax treaty. A FTC was therefore available to Canco by reason of the treaty, with such FTC not to exceed its Canadian tax otherwise payable on the gain. (BrazilCo was apparently not a foreign affiliate of Canco.)