27 April 1998 Internal T.I. E9805107 - capital gain inclusion rate for commodities

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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues: capital gain inclusion rate for commodities in 1997

Position: 75% if capital treatment applies

Reasons: although it-346r has not been updated to reflect the legislative change in 1988, it is 75% of the capital gain that must be included in income when the disposition is reported as a capital gain

		April 27, 1998
	Surrey Tax Centre	HEADQUARTERS
	Elaine Hill, Manager	A. Humenuk
	Enquiries & Adjustments
	Attention: Diana Townley
		980510

Capital Gain Inclusion Rate for Commodities

This is in response to your enquiry of February 19, 1998, concerning the capital gain inclusion rate for the sale of commodities which are subject to the capital treatment described in paragraph 7 of Interpretation Bulletin IT-346R, Commodity Futures and Certain Commodities.

A taxpayer who consistently reports gains and losses from the sale of commodity futures and commodities on a capital basis is disputing the 75% inclusion rate used for gains and losses realized in 1997 on the basis that paragraph 7 of IT-346R refers to a 50% income tax inclusion rate.

While we endeavour to update interpretation bulletins on a timely basis, it should be noted that our publications do not have the force of law. In cases where an interpretation bulletin has not yet been revised to reflect a particular legislative change, readers should refer to the amended legislation and its effective date. In this regard, please refer the taxpayer to paragraph 3 of the Index - Income Tax Interpretations Bulletins and Technical News.

The capital gain inclusion rate for 1978, the year in which IT-346R was published, was changed in 1988. The inclusion rate for 1988 and 1989 was 2/3 or 66.7% and the inclusion rate for 1990 and subsequent taxation years is 3/4 or 75%. The capital gain inclusion rate for a particular year is set out in the annual General Income Tax Guide.

We trust our comments will be of assistance in responding to the taxpayer.

P. Spice
Section Chief
Business, Property and Employment Section III
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
c.c. John Oulton
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