30 October 1989 Income Tax Severed Letter AC58818 - Money in Canadian Currency not Considered Capital Property

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.

5-8818
             19(1)                           S. Leung
                                             613-957-2116

October 30, 1989

Dear Sirs:

Re: Paragraph 54(b) of the Income Tax Act (the "Act")

We are writing in response to your letter of September 28, 2989 wherein you requested our view on whether, for purposes of subsection 80(1) of the Act, "cash" would be considered capital property within the meaning assigned by paragraph 54(b) of the Act.

Capital property of a taxpayer is defined under paragraph 54(b) of the Act to mean

(i) any depreciable property of the taxpayer, and

(ii)     any property (other than depreciable property), any gain
         or loss from the disposition of which would, if the
         property were disposed of, be a capital gain or a
         capital loss, as the case may be, of the taxpayer.

Depreciable property has the meaning assigned by subsection 13(21) of the Act.

Therefore, a capital property (other than a depreciable property) must be

(a) a property, and

(b)      capable of giving rise to a capital gain or capital loss
         on its disposition.

Pursuant to subsection 248(1) of the Act, property includes money. However, a disposition of money in Canadian currency would not normally result in a capital gain or a capital loss. It is therefore, our opinion that, for purposes of subsection 80(1) of the Act, money in Canadian currency would not normally be considered capital property within the meaning assigned by paragraph 54(b) of the Act.

The foregoing comment represents our general view of the subject matter in your letter. It is not a ruling and in accordance with the guidelines explained in Information Circular 70-6R, dated December 18, 1978, is not binding on the Department.

Yours truly,

for Director Reorganizations and Non-Resident Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch