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.
| 24(1) |
June 1990 |
| |
900937 |
| |
M. Vallée |
Question 12
An individual sells capital property taking back, as conditional payment of the unpaid balance of the purchase price, a five-year promissory note from the purchaser enabling the individual to claim a reasonable capital gain reserve under subparagraph 40(1)(a)(iii) of the Act. The individual subsequently transfers the promissory note to his wholly-owned corporation, taking back a five-year promissory note from the corporation. Is the individual still entitled to claim a reserve under subparagraph 40(1)(a)(iii)?
Department's Position
As indicated in paragraph 7 of Interpretation Bulletin IT-436R, it is generally our view that where a vendor disposes of a noted receivable from a purchaser of a capital property to a third party in consideration for a promissory note of that third party, a capital gains reserve under subparagraph 40(1)(a)(iii) is no longer available because there is no longer anything due to the vendor from the purchaser in the original transaction.
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, 1990
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, 1990
Email this Content