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.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
Transactions in commodities by mutual fund trusts
Position TAKEN:
Mutual fund trust may not make the election contemplated by paragraph 7 of Interpretation IT-346R to be treated as speculator for the purpose of reporting gains and losses from transactions in commodities and commodity futures.
Reasons FOR POSITION TAKEN:
File 932622, 933400, 3-1927 and tax cases
XXXXXXXXXX 5-941294
Attention: XXXXXXXXXX
September 6, 1994
Dear Sirs:
Re: Transactions in Commodities by Mutual Fund Trusts
This is in reply to your letter dated May 16, 1994 wherein you requested a technical interpretation with respect to transactions in commodities by mutual fund trusts. We apologize for the delay in responding to your request.
As explained in Information Circular 70-6R2, it is not the Department's practice to comment on proposed transactions other than in the form of advance income tax rulings. Taxpayers seriously contemplating proposed transactions are best advised to seek a formal ruling, submitting a complete statement of facts and issues as well as copies of all relevant documents. Should your situation involve completed transactions, you should submit all relevant facts and documentation to the appropriate taxation district office for their views. We are therefore not in a position to give you a definite response as to the application of the provisions of the Act. However, we can offer you the following general comments which may be of assistance although, in certain circumstances, they may not be appropriate to your specific situation.
The determination of whether any particular gain or loss is on account of income or capital is always a question of fact to be resolved having regard to all the circumstances surrounding a transaction. We are of the opinion that gains and losses resulting from transactions in commodities by mutual fund trusts are, generally, considered to be derived from an adventure on the nature of trade. Consequently, such gains or losses are on income account and mutual fund trusts may not elect to treat their gains or losses on capital account as contemplated by paragraph 7 of Interpretation Bulletin IT-346R.
We trust that these comments will be of assistance to you.
Yours truly,
for Acting Director
Manufacturing Industries,
Partnerships and Trusts Division
Rulings Directorate
Policy and Legislation Branch
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