CRA indicates that a superficial loss was allocated on a pooled basis to the ACB of shares held at the end of the 61-day period by affiliated persons
On March 15, 2022, an individual disposes of all of his shares (being 2,000) of Pubco, and realized a capital loss of $10,000. On March 16, 2022, his spouse acquired 2,000 shares of Pubco. In addition, his RRSP had acquired 1,000 shares of Pubco on March 10, 2022. Finally, the individual acquired 500 shares of ABC Pubco on April 13, 2022.
In addressing the question of how the denied superficial loss of $10,000 should be allocated to the replacement shares pursuant to s. 53(1)(f), CRA stated that, in accordance with IT-456R, para. 12, the loss should be determined as if all the affiliated persons involved were one person, and then prorated on the basis of all the substituted properties held by each person at the end of the 61-day period.
Consequently, the $10,000 superficial loss would be allocated in proportion to the fractions 1000/3500, 2000/3500 and 500/3500 to increase the ACB of the 1,000 shares acquired by the RRSP, the 2,000 shares acquired by the individual’s spouse and the 500 shares acquired by the individual, respectively.
Neal Armstrong. Summaries of 7 October 2022 APFF Financial Strategies and Instruments Roundtable, Q.4 under s. 53(1)(f) and s. 40(3.3).