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: 1. Taxpayer requested background information on the identical property rules for shares.
Position: 1. No position taken.
Reasons: 1. Provided references to existing published material.
December 4, 2013
XXXXXXXXXX
Dear XXXXXXXXXX:
I am replying to your enquiry of October 30, 2013, about the tax rules for determining the adjusted cost base for a share when acquiring identical shares at different times.
Properties of a group are considered identical if each property in the group is the same as all the others. The most common examples of identical properties are shares of the same class of the capital stock of a corporation or units of a mutual fund. The Canada Revenue Agency (CRA) treats identical properties differently because of the rules in section 47 of the Income Tax Act.
As explained in Chapter 3 of Guide T4037, Capital Gains, when taxpayers buy identical properties, such as shares, at different prices over a period, the adjusted cost base for an individual share is calculated by dividing the total cost of the shares the taxpayers bought by the total number of shares they own. You can find Guide T4037 at www.cra.gc.ca /E/pub/tg/t4037. A technical explanation of the rules is also available in Interpretation Bulletin IT-387R2, Meaning of Identical Properties, at www.cra.gc.ca/E/pub/tp /it387r2-consolid.
The CRA administers and enforces the Act as passed by Parliament. Changes to federal tax policy and to the Act are the responsibility of the Department of Finance Canada. You can send questions on this subject to the Tax Policy Branch of Finance Canada, 17th Floor, East Tower, L'Esplanade Laurier, 140 O'Connor Street, Ottawa ON K1A 0G5.
I trust the information I have provided is helpful.
Yours sincerely,
Kerry-Lynne D. Findlay, P.C., Q.C., M.P.
Robert Dubis
(905) 721-5191
2013-051040
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