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:
Whether legal representative can file 110.6(19) capital gains election on behalf of deceased after June 15, 1997.
Position: No.
Reasons:
Owner of property must elect by dates set out in 110.6(24) as extended by 110.6(26).
May 6, 1998
Ministerial Correspondence Division HEADQUARTERS
Client Services Directorate A. Humenuk
Attention: Richard Gendron, Manager
981177
XXXXXXXXXX
Ministerial Correspondence 98-01322
This is in response to your memorandum of May 5, 1998, concerning the filing of a capital gains election under subsection 110.6(19) of the Income Tax Act (the "Act") after the expiry of the period during which such elections could be filed.
The capital gains deduction for property other than qualified farm property and qualified small business corporation shares was repealed by chapter 3 of the 1995 Statutes of Canada for 1996 and subsequent taxation years. In order to allow an individual who had an accrued gain on capital property as of February 22, 1994, a final opportunity to shelter such a gain, the Act was also amended to allow an individual to voluntarily include the accrued capital gain in income for the 1994 taxation year (or 1995 if the gain related to a business, the fiscal period of which included February 22, 1994 and ended in 1995) and claim the capital gains deduction thereon.
A capital gains election under subsection 110.6(19) of the Act to include the accrued gain in income for the 1994 or 1995 taxation year was required to be filed by the date that the individual’s income tax return for that year was due. For most individuals, the time limit imposed under subsection 110.6(24) of the Act required the election to be filed by April 30, 1995. Although the capital gains election under subsection 110.6(19) is not an election which is prescribed for the purposes of subsection 220(3.2) of the Act, subsection 110.6(26) of the Act provides similar relief in that it permited an individual to file a capital gains election within 2 years of the date the election was required to be filed, provided that the appropriate penalty was paid.
However, there is no provision in the Act which would permit an individual to file an election after the two year extension of time has expired. While the last possible date for a capital gains election will normally be April 30, 1997, an individual who had a business with a fiscal period which included February 22, 1994 and ended in 1995, would be able to file a capital gains election in respect of the accrued gain on the assets of that business on or before June 15, 1998, provided that appropriate penalty was paid.
As the accrued gains in question relate to publicly traded shares, we agree with your conclusion that the individual in question was not able to file a capital gains election in respect of those shares after April 30, 1997.
P. Spice
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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