Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Whether the deemed disposition rules in subsection 50(1) for shares of bankrupt corporations apply the purposes of the special relief provided in section 180.01 for stock option benefit deferrals.
Position: No.
Reasons: The preamble to subsection 50(1) restricts its application to the rules for determining capital gains and capital losses in subdivision c. It does not apply for the purposes of the Act as a whole.
XXXXXXXXXX
2011-042024
Eli Kae Moore
March 13, 2012
Dear XXXXXXXXXX :
Re: Application of subsection 50(1) to section 180.01
This is in reply to your letter of September 8, 2011 in which you ask whether the deemed disposition rules in subsection 50(1) of the Income Tax Act (the "Act") concerning shares of bankrupt corporations apply for the purposes of the special relief provided in section 180.01 of the Act for stock option benefit deferrals.
Our comments
The application of subsection 50(1) is restricted to subdivision c of Division B of Part I of the Act, dealing with capital gains and capital losses. It does not apply for the purposes of the Act as a whole. Consequently, in applying sections 7 and 180.01 of the Act in respect of a taxpayer who elected, under former subsection 7(8) of the Act, to defer tax liability on their stock option benefit until disposition of the optioned securities, the disposition would occur when the securities are actually disposed of or cancelled (or deemed to be disposed of because of a provision of the Act that applies for the purposes of the Act as a whole).
We trust the above comments are of assistance.
Yours truly,
Mary Pat Baldwin, CA
for Director
Financial Industries Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 2012
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 2012
Email this Content