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: For the T1135, how to calculate the cost amount of shares held as capital property in the year of death of an individual.
Position: Cost amount at year-end will be nil.
Reasons: A taxpayer who is deceased cannot hold property.
XXXXXXXXXX
2014-052761
August 21, 2014
Dear XXXXXXXXXX:
Re: T1135 for deceased individual
We are writing in response to your e-mail of March 26, 2014, concerning the reporting requirements for the form T1135 in the year of a taxpayer's death. In particular, you asked how to determine the cost at year-end and maximum cost during the year using the regular and the transitional reporting methods.
In your email, you described a hypothetical situation where an individual died on July 1, 2013, owning property that was specified foreign property with a total cost amount of $500,000, consisting of shares of non-resident corporations (that are not foreign affiliates). You asked us if the cost amount at year-end should be reported as nil since the estate is deemed to have acquired the property from the taxpayer at the time of death. As well, you asked whether the maximum cost amount for the year should be determined based on the period from January 1, 2013, to July 1, 2013, even though the taxation year of the deceased is the 2013 calendar year.
Our Comments
Written confirmation of the tax implications inherent in particular transactions is provided by this Directorate where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, "Advance Income Tax Rulings", dated May 17, 2002. This Information Circular and other CRA publications can be accessed on the internet at http://www.cra-arc.gc.ca/formspubs/menu-e.html. However, we are prepared to provide the following comments.
We agree that the reporting period is the calendar year. However, since the taxpayer is deemed to have disposed of the property immediately before death, the relevant period for determining the maximum cost amount for the year will be from January 1 until the date of death.
With respect to the determination of the cost amount at year-end, the situation is similar to that of any taxpayer who has disposed of its specified foreign property during the year. Since the taxpayer disposed of the property on the date of death, the cost amount of the property held at year-end would be nil.
If the property is being reported using the 2013 Transitional Reporting Method (as described in the instructions on the form), the "Maximum cost amount during the year" is reported as nil. The "Cost amount at year-end" as discussed above will also be nil.
We trust that these comments will be of assistance.
Yours truly,
Terry Young, CPA, CA
Manager, Administrative Law Section
International Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs 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, 2014
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, 2014
Email this Content