S. 40(3.6) does not deny capital loss on winding-up a CFA

S. 40(3.6) does not apply to deny a loss realized on the winding-up of a subsidiary (in this case, a controlled foreign affiliate) both because s. 69(5)(d) specifically ousts the application of s. 40(3.6) respecting property (in this case, the CFA’s shares) disposed of on a winding-up, and also because it is unlikely that under the foreign corporate law the CFA would be considered to still exist immediately after that disposition.

Neal Armstrong. Summaries of 15 August 2014 Memo 2014-0538591I7 under s. 40(3.6) and s. 93(2.01).