CRA confirms that s. 39(3) generally applies only to anonymous bond or debenture repurchases

Where a public corporation repurchases its bonds at a premium "in the open market, in the manner in which any such obligation would normally be purchased in the open market by any member of the public," s. 39(3) generally deems the premium to be a capital loss rather than potentially giving interest treatment to the corporation and the vendors under s. 18(9.1).

CRA has confirmed where the transaction is such that the corporation and the vendor know each other’s identities, the quoted words are not satisfied – so that s. 39(3) generally would not apply to a tender offer or the exercise of a call right.

Neal Armstrong. Summary of 2014 TEI Roundtable, Q. E.3 under s. 39(3).