CRA confirms that personal-use property (PUP) of the deceased may not be PUP of the estate

We have uploaded the questions posed, and provided summaries of the oral responses given, at the 2023 STEP Roundtable held today.

In Q.1, CRA confirmed that since an estate is a separate taxpayer from the deceased, items that were personal-use property (PUP) of the deceased and, thus, deemed on death to be disposed of for minimum proceeds and ACB of $1,000 per item pursuant to s. 46(1), could potentially not be PUP to the estate (e.g., they could be put in storage). If not PUP to the estate, they would be deemed pursuant to s. 70(5)(b) to have an ACB equal to their FMV immediately before death (without regard to the $1,000 rule) and any subsequent sale would generally give rise to a capital gain or loss computed in the normal way.

Neal Armstrong. Summary of 20 June 2023 STEP Roundtable, Q.1 under s. 46(1).