Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Tax Executive Institute Conference
Question XXIV MacMillan Bloedel
Does Canada Customs and Revenue Agency ("CCRA") accept the result and reasoning of the Federal Court of Appeal decision in The Queen v. MacMillan Bloedel Ltd. (99 DTC 5446, FCA) in which the increase in the value of the U.S. dollar relative to the Canadian currency was treated as a capital loss under subsection 39(2) of the Income Tax Act on the redemption of the preferred shares of MacMillan Bloedel Ltd.?
CCRA Response
We accept the reasoning of the Federal Court of Appeal but are not prepared to extend the reasoning to a redemption of shares in general.
The case deals with the redemption of redeemable and retractable preferred shares which may be viewed as similar to the repayment of a debt obligation. Consequently, the application of this case is restricted to its facts and is confined to situations in which the shares redeemed are redeemable and retractable at a specific amount as specified in the terms and conditions of the shares.
Author: Simon Leung
November 19, 1999
File # 9929605
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© Her Majesty the Queen in Right of Canada, 1999
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