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.
XXXXXXXXXX
Attention: XXXXXXXXXX
Dear Sirs:
RE: Sub-paragraph 50(1)(b)(iii) of the Income Tax Act (the "Act")
This is in reply to your letter of January 6, 1993, and further to our telephone conversation (Thornley-XXXXXXXXXX) of March 10, 1993, concerning the above noted sub-paragraph of the Act and the decision reached in the Lindsay D. Anderson case, (92 DTC 2296) involving the application of the Bill C-92 amendment to sub-paragraph 50(1)(b)(iii) of the Act to a particular taxpayer's fact situation.
As discussed, we are of the view that the aforementioned amendment and the proposed extension of time relate solely to "shares" of a corporation (sub-paragraph 50(1)(b)(iii)) and not to a "debt owing to a taxpayer" (paragraph 50(1)(a)).
The Appeals Branch of Revenue Canada, Taxation confirms that the decision in the Anderson case has not been appealed, however, the case is not to be considered as a precedent as the decision reached was based on the facts of that particular case and because the Court felt that the appellant was entitled to an allowable business investment loss on the deemed disposition of the debt owing to him by his corporation.
We remain of the view that a loss arising from a debt owing to a taxpayer can only be claimed in the year the debt is established to have become a bad debt. On the other hand in order to claim a loss on the deemed disposition of a share in the circumstances of subparagraph 50(1)(b)(iii) of the Act the taxpayer must file an election as outlined in that subparagraph (as amended).
We trust our comments will be of assistance to you.
Yours truly,
E. Wheeler for Director Business and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
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