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 CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues: whether 80.03(2) (and the reference to paragraph 53(2)(g.1) therein) is applied on a share by share basis
Position: yes
Reasons: (a) subsection 80.03(2): "a particular capital property...that is a share"
(b) paragraph 80.03(2)(a) : "deducted under paragraph 53(2)(g.1) in computing the ACB to the transferor of the particular property immediately before that time"
2002-017662
XXXXXXXXXX Denise Dalphy, LL.B.
(613) 941-1722
March 4, 2003
Dear XXXXXXXXXX:
Re Technical Interpretation of Subsection 80.03(2
This is in response to your electronic message of November 28, 2002 wherein you requested a technical interpretation with regard to subsection 80.03(2) of the Income Tax Act (the "Act").
Written confirmation of the consequences inherent in particular transactions are given by this directorate only where the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. Where the particular transactions are partially completed or completed, the enquiry should be addressed to the relevant Tax Services Office. Notwithstanding the foregoing, we are providing the following comments.
We agree with your opinion that, since subsection 80.03(2) of the Act applies to "...a particular capital property ...that is a share", this provision is to be applied on a share-by-share basis. As such, in determining the deemed capital gain, it is the tax attributes of each share that are relevant.
Further, because paragraph 80.03(2)(a) of the Act refers to "...all amounts deducted under paragraph 53(2)(g.1) in computing the adjusted cost base to the transferor of the particular property..." [emphasis added] and the general scheme of the Act requires separate computations for each property (such as a share) disposed of, the paragraph 53(2)(g.1) amount included in paragraph 80.03(2)(a) would be the amount that was allocated to and reduced the adjusted cost base of each share. As such, paragraph 53(2)(g.1) amounts that relate to shares that have previously been redeemed would not be included in determining the subsection 80.03(2) capital gain of each "surrendered" share.
The foregoing comments represent our general views with respect to the subject matter. As indicated in paragraph 22 of Information Circular 70-6R5, the above comments do not constitute an income tax ruling and accordingly are not binding on the Canada Customs and Revenue Agency. Our practice is to make this specific disclaimer in all instances in which we provide an opinion.
We hope the above opinion will assist you.
Steve Tevlin
Manager
Corporate Financing Section
Financial Industries Division
Income Tax Rulings Directorate
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