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.
Subject: Minimum Tax _ Subsection 127.52(1)
This is in reply to your memo dated March 15, 1991 wherein you requested our interpretation of the calculation of minimum tax where a taxpayer does not claim any of his available unapplied net capital losses against his capital gains for regular tax purposes.
Paragraph 127.52(1)(i) of the Act provides that for the purposes of computing the adjusted taxable income of an individual for a year, only the amounts deductible under paragraphs 111(1)(a), (c) and (d) are restricted to the amount actually claimed for regular tax purposes. Subparagraph 127.52(1)(i)(ii) allows a deduction in computing adjusted taxable income equal to the "amount that can reasonably be considered to be the amount that he would have deducted" had all calculations been made without any reference to fractions. By virtue of clauses 127.52(1)(i)(ii)(A) and (B) a taxpayer is permitted to offset an adjustment to the taxable capital gain for minimum tax purposes by any net capital losses available from other years.
Therefore we agree with the conclusion reached in your memorandum that "even though there is no claim for net capital losses of other years" in the regular tax calculation, "for minimum tax purposes, the taxpayer should be allowed to claim a deduction for net non-deductible capital losses . . . in order to restore the adjusted taxable income to the amount of regular taxable income."
You also asked if you should automatically allow this deduction, even if no such deduction (net non-deductible capital losses) was calculated on the T691 by the taxpayer. As we agree that the amount the taxpayer would have deducted under subparagraph 127.52(1)(i)(ii) is equal to the lesser of the non-taxable portion of the capital gain and the unapplied losses available, then in our opinion the deduction should be automatically applied when calculating minimum tax.
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© Her Majesty the Queen in Right of Canada, 1991
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© Sa Majesté la Reine du Chef du Canada, 1991
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