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.
Principal Issues: What are the reporting requirements when a taxpayer transfers shares at fmv held in his own account to an account held by himself and his adult daughter?
Position: Reporting of disposal on T5008 for half of the transfer
Reasons: Disposal - application of 69(1)(b)
XXXXXXXXXX 2004-008361
C. Tremblay, CMA
(613) 957-2139
July 13, 2004
Dear XXXXXXXXXX:
Re: Transfer of securities
This is in reply to your electronic letter of June 30, 2004, and further to our telephone conversations of July 6 and 7, 2004 (XXXXXXXXXX/Tremblay) wherein you enquire on the reporting requirements of the XXXXXXXXXX (the "Bank") in the following situation.
A client of the Bank has an account (in his name only) where he holds XXXXXXXXXX shares. He decides to open another account jointly with his daughter, who is older than 18 and not infirm. The client transfers the XXXXXXXXXX shares from his account in his own name to the joint account with his daughter.
The circumstances outlined in your letter relate to a specific fact situation. As explained in Information Circular 70-6R5, Advance Income Tax Rulings, this Directorate does not comment on transactions involving specific taxpayers except by way of an advance income tax ruling in respect of proposed transactions. When the situation involves a specific taxpayer and a completed transaction, the question should be directed to the appropriate Tax Services Office for their views, along with all relevant facts and documentation. However, we are prepared to offer the following general comments, which may be of assistance.
Except as expressly provided by the Income Tax Act (the "Act"), where anything is disposed of by a taxpayer to a person with whom he does not deal at arm's length for no proceeds or for proceeds less than its fair market value, the taxpayer is deemed pursuant to paragraph 69(1)(b) of the Act to have received proceeds equal to its fair market value. Accordingly, in your situation, your client would have a disposal of a half interest in the XXXXXXXXXX shares at fair market value and his daughter would be acquiring her interest in these shares at the same fair market value. The bank should thus report, on the T5008, a disposal of the interest in the shares the client has transferred to his daughter.
We trust the above comments are of assistance. However, as stated in paragraph 22 of Information Circular 70-6R5, the opinion expressed in this letter is not a ruling and consequently is not binding on the CRA.
Yours truly,
Steve Tevlin
For director
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 2004
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 2004
Email this Content