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.
Whether the conversion of ownership from a joint tenancy to a tenancy in common would be considered a disposition for tax purposes.
Unlikely that it would constitute a disposition.
According to paragraph (e) of the definition of disposition, a disposition does not include a change in legal ownership, unless there has been a corresponding change in the beneficial ownership.
December 22, 1997
We are replying to your letter of July 17, 1997, in which you inquire whether the conversion of ownership from a joint tenancy to a tenancy in common of personal use real estate would be considered a disposition for purposes of the Income Tax Act (the "Act").
Written confirmation of the tax implications inherent in particular transactions are given by this Directorate only where the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R3. The following comments are, therefore, of a general nature only.
The term "disposition" is defined in subsection 54(1) of the Act. In accordance with paragraph (e) of the definition, a disposition does not include a transfer of property by way of a change in legal ownership, unless there has been a corresponding change in the beneficial ownership. Since possession, use and risk are the primary attributes of beneficial ownership, a change in the registration of legal title alone would be of little significance in determining whether there has been a disposition. Factors that indicate passing of beneficial ownership include physical or constructive possession, entitlement to income from the property, assumption of responsibility for insurance coverage, property taxes and other obligations, as well as, entitlement to call for the mortgaging of the property or to transfer it by sale or by will.
In our view, provided that immediately after the conversion, each co-tenant retains their proportionate undivided interest in the property, the mere change in the type of ownership from joint tenancy to tenants in common of real property would not constitute a disposition for purposes of determining income from business or property or a capital gain, nor would it be considered a partition of property for the purpose of the rules in subsections 248(20) and (21) of the Act.
We trust that these comments will be of assistance.
Business and Publications Division
Income Tax Rulings and
Policy and Legislation 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, 1997
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, 1997