CRA finds that a non-TCP capital loss realized on emigration was available for carryforward to offset a TCP gain

The Directorate confirmed that a non-resident may offset a taxable capital gain on the disposition of taxable Canadian property with a net capital loss that arose on a previous deemed disposition, while the taxpayer was a resident of Canada, of capital property that was not TCP. The particular situation being addressed was a Canadian corporation that realized a deemed capital loss under s. 128.1(4)(b) on the disposition of non-TCP on its emigration from Canada, and carried that loss forward for use when it subsequently disposed of TCP. The restriction in s. 111(9) did not apply because such deemed disposition occurred (barely) within the deemed stub taxation year, ending immediately before the time of its emigration, and it was still resident in Canada in that stub year.

Neal Armstrong. Summary of 24 July 2017 Internal T.I. 2017-0705801I7 under s. 111(9).