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:
An individual wants to dispose of shares at a loss, claim an allowable capital loss, contribute the cash received into his RRSP and have the RRSP immediately reacquire the same shares. Will subparagraph 40(2)(g)(i) of the Act apply to deny the loss.
Position TAKEN:
No. However, GAAR may apply.
Reasons FOR POSITION TAKEN:
The reacquisition of the shares by the RRSP within 30 days of the initial disposition would not constitute an acquisition of the property by an "affiliated person". Section 251.1 of the Act (i.e. the affiliated person rules ) does not apply to trusts.
With respect to GAAR, this is clearly an issue that would require further consideration.
XXXXXXXXXX 5-983082
D. Miller
January 28, 1999
Dear XXXXXXXXXX:
Re: Section 40(2)(g) - Disposition of Shares
This is in reply to your letter of November 20, 1998, regarding the disposition of shares at a loss by an individual, a contribution of the cash to his RRSP and the immediate reacquistion of these shares by the RRSP. You have enquired whether the loss could be deemed to be nil pursuant to subparagraph 40(2)(g)(i) of the Income Tax Act (the "Act").
We agree with your analysis that subparagraph 40(2)(g)(i) of the Act would not apply. However, the Department would not rule out the application of GAAR to the series of transactions described above.
We trust that these comments will be of assistance.
Yours truly,
Jim Wilson
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
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, 1999
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, 1999
Email this Content