Section 40

Table of Contents

Subsection 40(1) - General rules

Cases

Abrametz v. Canada, 2009 DTC 5828, 2009 FCA 111

The taxpayer would have established that he realized a capital loss if he had established the following:

  1. a fellow shareholder ("Paulhus") of the...

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Administrative Policy

Calculating and reporting your capital gains and losses

Use the exchange rate that was in effect on the day of the transaction or, if there were transactions at various times throughout the year, you...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 39 - Subsection 39(2) 33

Paragraph 40(1)(a)

Administrative Policy

28 April 2008 External T.I. 2007-0243711E5 F - Gains et pertes sur change

Regarding a requested clarification of the second part of paragraph 13 of IT-95R regarding the realization of a foreign exchange gain or loss on...

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Subparagraph 40(1)(a)(i)

Cases

Martin v. Canada, 2015 FCA 204

The taxpayer's employment at his brokerage employer was terminated. He was unable to find replacement employment or to establish his own financial...

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Gaynor v. The Queen, 91 DTC 5288 (FCA)

In rejecting a submission that the capital gain realized by the taxpayer from the purchase and sale in U.S. dollars of U.S. securities should be...

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The Queen v. Demers, 86 DTC 6411, [1986] 2 CTC 321 (FCA)

Although the price stipulated in the agreement for the sale of shares of a corporation ("Chibougamau") was $7,800,000, the agreement also provided...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 54 - Proceeds of Disposition 130

See Also

Giguère v. Agence du revenu du Québec, 2018 QCCQ 874

The taxpayer received fraudulent advances from a corporation (Groupe Norbourg) managed by her husband. She used the money to purchase a property...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(i) fraudulent advance did not qualify as a loan 202

Rio Tinto Alcan Inc. v. The Queen, 2016 TCC 172, aff'd 2018 FCA 124

The taxpayer ("Alcan"), a Canadian public company, incurred fees on capital account respecting its butterfly spin-off of a subsidiary holding a...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Legal and other Professional Fees investment dealer fees incurred respecting the advisability of making hostile takeover were fully deductible under s. 9 417
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(bb) investment dealer fees re advisability of making hostile takeover were fully deductible 529
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(cc) legal fees incurred in securing regulatory approval for a hostile bid related to the bidder's business of earning income from shares and interaffiliate sales 182
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(g) takeover bid circular costs did not qualify 102
Tax Topics - Income Tax Act - Section 14 - Subsection 14(5) - Eligible Capital Expenditure fees incurred in order to acquire shares were excluded/butterfly expenses excluded as taxpayer was not in the business of implementing corporate reorganizations 365
Tax Topics - Income Tax Act - Section 169 - Subsection 169(2.1) raising general question of deductibility of fees and listing s. 20(1)(e) did not satisfy s. 165(1.11) 246
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(e) failure to advance evidence showing allocation of fees to share consideration 139
Tax Topics - Statutory Interpretation - French and English Version finding common meaning of 2 versions of s. 20(1)(bb) 108

Brosamler Estate v. The Queen, 2012 DTC 1193 [at 3493], 2012 TCC 204 (Informal Procedure)

he estate of a deceased German resident sold three rental properties in BC. The estate added probate and legal fees that were paid in...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 54 - Adjusted Cost Base probate fees added to cost 154

Dubois c. La Reine, 2007 DTC 1534, 2007 TCC 461 (Informal Procedure)

The taxpayer had to pay an amount in settlement of the damages claim of the vendor and incurred related legal expenses as a result of a...

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Avis Immobilièn G.M.B.H. v. The Queen, 94 DTC 1039, [1994] 1 CTC 2204 (TCC)

The taxpayer, which was a corporation resident in West Germany, borrowed deutschemarks ("DM") from a German bank to help finance the acquisition...

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Words and Phrases
expense for the purpose of

Capcount Trading v. Evans, [1993] BTC 3 (C.A.)

A capital loss of a British company from the disposal of shares of a Canadian company was to be determined by computing the difference between the...

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Campbellton Enterprises Ltd. v. MNR, 90 DTC 1869, [1990] 2 CTC 2413 (TCC)

A bonus equal to three months' interest which the taxpayer paid in order to discharge a mortgage upon the sale of a rental property was deductible...

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Samson Estate v. MNR, 90 DTC 1150, [1990] 1 CTC 2223 (TCC)

Professional fees incurred in seeking the cancellation of a zoning by-law were found to have been incurred in order to more easily dispose of the...

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Bentley v. Pike, [1981] T.R. 17 (HCJ.)

Mrs. Bentley was considered under the Finance Act 1965 to have acquired, on her father's death in 1967, a 1/6 share of real property situate in...

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Administrative Policy

22 January 2020 External T.I. 2014-0559281E5 F - T5008

The T5508 Guide states:

Report only the total proceeds in box 21. Do not deduct any expenses from the proceeds… .

Respecting the application...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 49 - Subsection 49(1) writing of call option (with deemed nil ACB) is reported as having nil “cost” on T5008 99
Tax Topics - Income Tax Regulations - Regulation 230 - Subsection 230(2) “cost” of call options closed out by writer is nil, not the cost of offsetting call option purchase/cost re short sale is the FMV of the borrowed shares 351
Tax Topics - Income Tax Act - Section 9 - Computation of Profit cost of short sale is FMV of borrowed shares 59

15 October 2015 Internal T.I. 2014-0527041I7 F - Disposition de biens

In the course of a discussion not based on a repetition of the applicable facts, CRA stated:

...Avis Immobilien GMBH ... [found that] "for the...

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Words and Phrases
for the purpose

15 September 2015 External T.I. 2015-0583221E5 F - Redemption by a cooperative of its own shares

Is a gain realized by a cooperative corporation, on the redemption of its own preferred shares, taxable? CRA responded:

[N]o provision of the Act...

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10 June 2013 STEP Round Table Q. 10, 2013 0480411C6 (Brosamler decision)

CRA considers Brosamler Estate to be confined to "a very specific fact situation," noting that the legal and probate fees in issue would have been...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 54 - Adjusted Cost Base 75

11 January 2013 External T.I. 2012-0436771E5 - Sale of a business

The sole shareholder of Aco is required under the terms of the share sale agreement to repay, in full, at closing, a bank loan owing by Aco and an...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 18 - Subsection 18(9.1) penalty paid by shareholder 85
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(e) continued deduction where debt settlement by shareholder rather than taxpayer 24

15 November 2012 External T.I. 2012-0461291E5 F - Frais judiciaires pour clarifier une servitude

A taxpayer who owned both a lakeside lot on which the taxpayer had a cottage and an adjoining lot (the "second lot") on which there was an...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 54 - Adjusted Cost Base no comment on whether legal costs to avoid expanded easement were ACB addition 78

24 April 2012 Internal T.I. 2011-0400671I7 F - Honoraires professionnels

A law firm (Advisor B) that was acting for both the purchasers and vendors (Mr. B and Corporation D) of shares of Corporation A was paid an agreed...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Start-Up and Liquidation Costs fees incurred by individual before intention to form a corp did not qualify as pre-incorporation expenses 486
Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) meaning of “benefit” 164

4 September 2007 Internal T.I. 2007-0237791I7 F - Gain et perte sur taux de change

The taxpayer had a US dollar bank account into which it deposited US dollars from its sales and from which it lent US dollars to affiliates (in...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 40 - Subsection 40(2) - Paragraph 40(2)(g) - Subparagraph 40(2)(g)(ii) s. 40(2)(g)(ii) extended to FX losses on non-interest-bearing loan to parent 25

7 June 2007 External T.I. 2007-0228831E5 F - Pénalité au rachat d'une obligation

When a bondholder requested an early repayment of its bonds, it was required to pay a premium that was withheld first from any accrued but unpaid...

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29 July 2004 Internal T.I. 2003-0023761I7 F - Contrat de SWAP d'équité

After concluding that the payment, on the termination of an equity swap, by the taxpayer of the swap termination payment gave rise to a capital...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Loss v. Loss loss on equity swap entered into in monetization transaction was on capital account 163
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition termination of equity swap contract entailed the disposition of property 67
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Futures/Forwards/Hedges equity swap was to hedge the risk under a capital borrowing, so that loss on closing out the swap was on capital account 358

9 June 2003 Internal T.I. 2003-001330

Legal fees incurred, following the disposition by the taxpayers of a property, in a dispute as to the amount of the final payment due to the...

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21 October 1993 Income Tax Severed Letter 9325325 - Mortgage Pay-out Penalties

Where penalty payments are made in order to pay off a mortgage, or reduce the interest rate on a mortgage, prior to the sale of the mortgaged...

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26 January 1993 Memorandum (Tax Window, No. 28, p. 15, ¶2399)

Legal fees incurred by a taxpayer in a year subsequent to the sale of a capital property in order to collect the proceeds of disposition will not...

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91 CR - Q.29

Where a landlord makes an inducement payment outside the ordinary course of its business to facilitate the sale of a building by increasing the...

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18 November 1991 Memorandum (Tax Window, No. 11, p. 19, ¶1537)

S.40(1)(a)(i) may reduce the taxpayer's capital gain on the sale of shares where under the agreement the taxpayer is required to use a portion of...

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89 C.M.TC - "Leasing Costs"

"payments made in contemplation of the sale of the property, i.e., to bring the property to full occupancy to enhance the sellling price ... are...

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Subparagraph 40(1)(a)(iii)

Cases

Pineo v. The Queen, 86 DTC 6322, [1986] 2 CTC 71 (FCTD)

The reserve was not available in respect of a demand promissory note received by the vendors as partial consideration for the sale of shares of a...

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The Queen v. Derbecker, 84 DTC 6549, [1984] CTC 606 (FCA)

In S.40(1)(a)(iii)(A), "the words 'due to him' look only to the taxpayer's entitlement to enforce payment and not to whether or not he has...

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Words and Phrases
due

Neder v. The Queen, 82 DTC 6022, [1981] CTC 501 (FCA)

Where a taxpayer has been reassessed so as to include in his income a taxable capital gain, a S.40(1)(a)(iii) reserve is not available to the...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Fair Market Value - Land 66

See Also

Alguire v. The Queen, 95 DTC 532 (TCC)

In 1981, the taxpayer sold the shares of a corporation owned by him to his mother for $600,000 under an oral agreement that she would pay him when...

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Administrative Policy

S4-F7-C1 - Amalgamations of Canadian Corporations

1.95 A person entitled to a reserve under paragraph 20(1)(n), subparagraph 40(1)(a)(iii) or subparagraph 44(1)(e)(iii) in respect of an amount...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 100 - Subsection 100(2.1) s. 100(2.1) applies to non-qualifying amalgamation 64
Tax Topics - Income Tax Act - Section 111 - Subsection 111(12) application following amalgamation 113
Tax Topics - Income Tax Act - Section 116 - Subsection 116(1) deemed tcp following amalgamation 167
Tax Topics - Income Tax Act - Section 13 - Subsection 13(5.1) continuity of s. 13(5.1) on amalgamation 132
Tax Topics - Income Tax Act - Section 165 - Subsection 165(1) Amalco can continue objection and receive refunds 157
Tax Topics - Income Tax Act - Section 169 Amalco can continue objection 103
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(n) reserve after amalgamation 62
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Shareholder shareholder need not hold shares 88
Tax Topics - Income Tax Act - Section 251 - Subsection 251(3.1) deemed non-arm's length relationship on amalgamation 172
Tax Topics - Income Tax Act - Section 256 - Subsection 256(7) - Paragraph 256(7)(b) related party, majority and 50% group exceptions 495
Tax Topics - Income Tax Act - Section 66.7 - Subsection 66.7(7) successoring where non-wholly owned amalgamation 109
Tax Topics - Income Tax Act - Section 69 - Subsection 69(13) no disposition of predecessor property on general principles 113
Tax Topics - Income Tax Act - Section 7 - Subsection 7(1.4) s. 87(5) not applicable 112
Tax Topics - Income Tax Act - Section 80.01 - Subsection 80.01(3) non-87 amalgamation/no FX gain 165
Tax Topics - Income Tax Act - Section 84 - Subsection 84(3) no deemed dividend to dissenter on amalgamation 87
Tax Topics - Income Tax Act - Section 85 - Subsection 85(1) election filing by Amalco 109
Tax Topics - Income Tax Act - Section 87 - Subsection 87(1.1) s. 87(1.1) qualifies for all s. 87 purposes 66
Tax Topics - Income Tax Act - Section 87 - Subsection 87(1.2) successoring where non-wholly owned amalgamation 109
Tax Topics - Income Tax Act - Section 87 - Subsection 87(10) deemed listing of temporary Amalco shares 120
Tax Topics - Income Tax Act - Section 87 - Subsection 87(11) gain if high PUC is sub shares 55
Tax Topics - Income Tax Act - Section 87 - Subsection 87(1) presumptive satisfaction of s. 87(1)(a)/dissent and squeeze-outs onside 297
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(a) new corp/deemed year end coinciding or not with acquisition of control 758
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(b) Amalco must follow predecessor's valuation method subject to truer picture doctrine 64
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(c) reserve after amalgamation 113
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(d) cost amount carryover 149
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(e.1) s. 100(2.1) applies to non-qualifying amalgamation 64
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(o) no continuity rule for non-security options 139
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(q) pre-amalgamation services 106
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2.11) loss-carry back to parent 169
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2.1) dovetailing with s. 88(1.1) 44
Tax Topics - Income Tax Act - Section 87 - Subsection 87(3.1) 346
Tax Topics - Income Tax Act - Section 87 - Subsection 87(3) PUC shifts 189
Tax Topics - Income Tax Act - Section 87 - Subsection 87(4) fractional share cash/ACB or value shift/implied non-recognition for predecessor shares 281
Tax Topics - Income Tax Act - Section 87 - Subsection 87(7) dovetailing with s. 78 and 112(12) 191
Tax Topics - Income Tax Act - Section 87 - Subsection 87(9) allocation of s. 87(9)(c)(ii) excess as parent chooses 230
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(d) late designation 122
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1.1) dovetailing with s. 87(2.1) 62
Tax Topics - Income Tax Act - Section 98 - Subsection 98(5) partnership dissolution on amalgamation 137
Tax Topics - Income Tax Regulations - Regulation 1100 - Subsection 1100(2.2) deemed non-arm's length relationship on amalgamation 467
Tax Topics - Income Tax Regulations - Regulation 1100 - Subsection 1100(2) deemed non-arm's length relationship on amalgamation 371
Tax Topics - Income Tax Regulations - Regulation 1102 - Subsection 1102(14) class continuity on non-arm's length amalgamation 327
Tax Topics - Income Tax Regulations - Regulation 8503 - Subsection 8503(3) - Paragraph 8503(3)(b) pre-amalgamation services 106
Tax Topics - Income Tax Act - Section 249 - Subsection 249(3) 136
Tax Topics - Income Tax Act - Section 22 - Subsection 22(1) 179

24 February 2014 External T.I. 2013-0505391E5 F - Clause de earnout renversé

CRA confirmed its position in 2000-0051115 that:

Where the cost recovery method is not used and the sale price of a property is not certain at the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(g) no capital gains reserve on reverse earn-out for a share sale 230

7 October 2013 Internal T.I. 2013-0504081I7 F - Interaction between 55(2) and 40(1)(a)(iii)

Vendor sold blocks of shares in the capital of a corporation (the “Purchaser”) to the Purchaser, with the purchase price being payable over a...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 55 - Subsection 55(2) s. 40(1)(a)(iii) reserve available where redemption proceeds payable on earnout basis 173
Tax Topics - General Concepts - Payment & Receipt distinction between promissory note as conditional or absolute payment 249

16 November 2001 External T.I. 1999-0009295 - Reserve deemed capital gain

Decision summary 55-066 dated 29 November 29 1985 addressed whether a shareholder could claim a reserve under s. 40(1)(a)(iii) when its shares...

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17 November 1999 External T.I. 9901265 - 97(1) AND A RESERVE

"[W]here and individual transfers property to a partnership under subsection 97(2) of the Act and receives, in addition to a partnership interest...

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Words and Phrases
loan

31 March 1995 External T.I. 9430115 - interest in a family farm partnership & capital gains RESERVE

A reserve may not be claimed where an individual transfers property to a partnership pursuant to s. 97(1) and receives as consideration a...

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93 C.R. - Q. 41

Re whether changes to the terms of a take back note or mortgage result in loss of the reserve.

10 October 1991 T.I. (Tax Window, No. 11, p. 14, ¶1515)

Where the original due date on a vendor take-back mortgage or promissory note is extended by agreement, the entitlement of the vendor to continue...

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21 August 1991 T.I. (Tax Window, No. 8, p. 6, ¶1403)

The entitlement of a vendor to claim a reserve where a promissory note was accepted only as evidence of the purchaser's obligation for the unpaid...

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14 February 1991 T.I. (Tax Window, Prelim. No. 3, p. 12, ¶1119)

A vendor take-back mortgage, whose scheduled payments of principal are substantially deferred due to the financial difficulty of the purchaser,...

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IT-236R2 "Reserves - Dispositions of Capital Property"

IT-436R "Reserves - Where Promissory Notes are Included in Disposal Proceeds"

Locations of other summaries Wordcount
Tax Topics - General Concepts - Payment & Receipt 43

Articles

Smith, "Corporate Restructuring Issues: Public Corporations", 1990 Corporate Management Tax Conference Report, pp. 6:6-6:8: discussion of claiming of reserve by vendor under a take-over bid.

Paragraph 40(1)(b)

Administrative Policy

18 August 2014 External T.I. 2014-0540361E5 F - CDA and the deeming rules of 40(3.6) or 112(3)

A corporation's capital dividend accounts will not be reduced by a loss on the redemption of shares held by it where such loss is deemed to be nil...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 89 - Subsection 89(1) - Capital Dividend Account no capital loss for CDA purposes where ss. 112(3) and 40(3.6) stop-loss rules apply 128

Subsection 40(2) - Limitations

Paragraph 40(2)(a)

Subparagraph 40(2)(a)(ii)

Administrative Policy

18 May 2004 External T.I. 2004-0069691E5 F - Incorporation des professionnels

Each of the partners, all individuals, in a partnership (a SENC) transfers their interest therein to the same corporation and each becomes a...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 98 - Subsection 98(3) - Paragraph 98(3)(b) WIP subject to s. 34 election is tranferred at nil 149
Tax Topics - Income Tax Act - Section 34 insolvency practice carried on by accountants does not qualify as accountancy 79
Tax Topics - Income Tax Act - Section 249.1 - Subsection 249.1(2) s. 249.1(2) not engaged by virtue only of no income being allocated to the partner 236

Paragraph 40(2)(b)

Cases

Cassidy v. Canada, 2011 FCA 271

The taxpayer sold his six-acre rural property after it was rezoned for residential use as a result of an application made on behalf of owners of...

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The Queen v. Joyner, 88 DTC 6459, [1988] 2 CTC 280 (FCTD)

In 1972, 14 acres of land which the taxpayer had acquired in 1965 was prohibited, by virtue of an Order in Council passed pursuant to the...

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The Queen v. Yates, 83 DTC 5158, [1983] CTC 105 (FCTD), aff'd 86 DTC 6296 [1986] 2 CTC 46 (FCA)

It was held that the gain from the disposition of a portion of a principal residence was completely exempt since "it was not argued that, by its...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 54 - Principal Residence 60

See Also

Francoeur v. Agence du revenu du Québec, 2016 QCCQ 11906

Aubé, J found that an entrepreneur who had followed a pattern of building and selling residences, realized a capital gain eligible for the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Real Estate somewhat quick flip by a builder was eligible for the principal residence exemption 343

Cassidy v. The Queen, 2010 DTC 1336 [at 4287], 2010 TCC 471

The taxpayer sold his six-acre rural property after it was rezoned for residential use as a result of an application made on behalf of owners of...

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Administrative Policy

11 October 2019 APFF Roundtable Q. 2, 2019-0812611C6 F - Résiliation d'un bail - Lease cancellation

A tenant had been annually renewing a lease of a condo since the time the condo was first leased in July 2013. The condo was sold in February...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(z) s. 20(1)(z) applies notwithstanding s. 18(1)(a) but is subject to source rule in s. 20(1) preamble 193
Tax Topics - Income Tax Act - Section 54 - Principal Residence lease termination payment received by tenant was eligible for principal residence exemption 116
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) s. 20(1)-preamble source rule applied 148

5 October 2018 APFF Financial Strategies and Instruments Roundtable Q. 11, 2018-0761571C6 F - Missing info on disposition of principal residence

CRA has summarized the detailed filing requirements for reporting a principal residence disposition and making the designation. CRA also...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 54 - Principal Residence - Paragraph (c) CRA is only waiving penalties for late-filed principal residence dispositions for 2017 and 2016 returns 355

6 October 2017 APFF Roundtable Q. 3, 2017-0709011C6 F - Désignation d’un bien comme résidence principale

On page 2 of Schedule 3 of the return for the year of disposition of a principal residence, if the individual checks the box for Case 1, would...

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Other locations for this summary
Tax Topics - Income Tax Act - Section 40 - Subsection 40(2) - Paragraph 40(2)(b) no loss of bonus year if standard designation
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 54 - Principal Residence - Paragraph (c) an individual accessing the “+1” rule on a principal residence disposition need not complete Form 2091 253

17 October 2014 Internal T.I. 2014-0546091I7 F - Indemnités lors d'une négociation de gré à gré

An individual who purchased a residential property received indemnity payments from the vendor, pursuant to a negotiated indemnity clause, to...

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7 October 2016 APFF Roundtable Q. 2, 2016-0652841C6 F - Changement partiel d’usage - immeuble locatif et résidentiel

S1-F3-C2 “Principal Residence” para. 2.7 states that a housing unit includes a unit in a duplex. However, in 2011-0417471E5, CRA indicated...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 45 - Subsection 45(1) - Paragraph 45(1)(c) switch between which triplex units used for personal/family rental or 3rd-party rental did not trigger change of use 249
Tax Topics - Income Tax Act - Section 54 - Principal Residence triplex contained separate housing units 151

7 October 2016 APFF Roundtable Q. 3, 2016-0652851C6 F - Annulation d'une promesse d'achat sur une maison

As a result of breach of a puchaser's obligation to purchase a personal residence, the individual vendor received $50,000 in damages from the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 39 - Subsection 39(1) - Paragraph 39(1)(b) no capital loss for damages paid for breach of purchase obligation 73

10 June 2016 External T.I. 2015-0590371E5 F - Résidence principale - stationnement

Where a parking space was acquired as part of the purchase of a residential condo unit, the parking space can thereafter form part of the condo...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 54 - Principal Residence - Paragraph (e) a parking space can form part of a condo housing unit 241

13 March 2013 External T.I. 2012-0473291E5 F - Société de personnes - maison détruite par le feu

The Taxpayer was a partner of a partnership carrying on a farming business and owning more than half a hectare of land on which there was a...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 44 - Subsection 44(5) - Paragraph 44(5)(a.1) replacement property generally is expected to have the same material characteristics 159
Tax Topics - Income Tax Act - Section 40 - Subsection 40(2) - Paragraph 40(2)(c) s. 40(2)(c) unavailable re disposition of building only from fire 111

5 October 2012 Roundtable, 2012-0453961C6 F - Copropriété indivise (50-50) d'un triplex

An individual held a triplex equally with his father in undivided co-ownership and also lived in one of the equally sized units as his principal...

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23 January 2008 External T.I. 2007-0237251E5 F - Résidence principale - Destruction d'un triplex

A taxpayer owns a triplex that was completely destroyed in a fire. He ordinarily inhabited part of the triplex as his principal residence before...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 54 - Principal Residence - Paragraph (e) garage remaining after destruction of triplex by fire was part of the contiguous land 171

25 July 2007 External T.I. 2007-0224601E5 F - Application de l'alinéa 40(2)b)

A taxpayer acquired a residence and the subjacent land in 20X1, ordinarily inhabited it for three years, then in 20X4, demolished it without...

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23 May 2007 External T.I. 2006-0215721E5 F - Application de l'alinéa 40(2)b)

A taxpayer acquired a cottage and the subjacent land in 1998, and ordinarily inhabited the cottage until 2002, when he demolished it and built a...

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11 May 2007 External T.I. 2006-0214351E5 F - Transfert d'un droit de propriété

A and his wife B, had been undivided owners of a duplex since 1999, and lived in one of the units with their daughter C, while the other was...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Property an occupied unit in a co-owned duplex can be designated as a principal residence 97

6 December 2006 External T.I. 2006-0152101E5 F - Disposition d'un domaine résiduel

A farmer disposes of his principal residence to a family farm corporation while retaining a life estate in it until he and his spouse die.

CRA...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 43.1 - Subsection 43.1(2) - Paragraph 43.1(2)(b) ACB addition to residual interest in farm principal residence disposed of to family farm corporation 233

11 April 1995 External T.I. 9507405 - 40(2)(B)

A non-resident who disposes of his principal residence can reduce the amount of the resulting capital gain by virtue of the fact that the...

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16 February 1995 Mississauga Breakfast Seminar, Q. 4

Discussion of interaction between capital gains election under s. 110.6(19) and claiming of principal residence exemption for some (but not all)...

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88 C.R. - Q.55

The taxpayer is not required to review his use and enjoyment of the property on a year by year basis respecting the half-hectare test.

80 C.R. - Q.24

Where a taxpayer purchased a vacant lot and later constructed his principal residence on it, the denominator will include the years that he owned...

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Paragraph 40(2)(c)

Administrative Policy

13 March 2013 External T.I. 2012-0473291E5 F - Société de personnes - maison détruite par le feu

The Taxpayer was a partner of a partnership carrying on a farming business and owning more than half a hectare of land on which there was a...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 40 - Subsection 40(2) - Paragraph 40(2)(b) partner can use the principal residence exemption re gain allocated by partnership from disposition of personally-used principal residence, including following s. 44 deferral 263
Tax Topics - Income Tax Act - Section 44 - Subsection 44(5) - Paragraph 44(5)(a.1) replacement property generally is expected to have the same material characteristics 159

Paragraph 40(2)(e)

See Also

Plant National Ltd. v. MNR, 89 DTC 401 (TCC)

As a consequence of the disposition by the taxpayer of voting preference shares of a corporation ("Enterprises") to Enterprises, Enterprises...

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Administrative Policy

12 May 1992 Memorandum 921006 (May 1993 Access Letter, p. 194, ¶C38-156)

Because there is only a deemed disposition under s. 50(1)(a) and not an actual disposition, s. 40(2)(e) does not apply to a loss arising under s....

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25 March 1991 T.I. (Tax Window, No. 1, p. 7, ¶1170)

The word "person" in s. 40(2)(e) includes "persons". Accordingly, if X Co. is controlled by Mr. X and Mrs. X together, s. 40(2)(e) will apply to a...

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10 January 1990 T.I. (June 1990 Access Letter, ¶1257)

s. 40(2)(e) generally will not apply to the winding-up or liquidation of a foreign affiliate provided that under the relevant foreign corporate...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 84 - Subsection 84(9) 58

86 C.R. - Q.22

The phrase "was controlled" means controlled at the time of the disposition.

Paragraph 40(2)(e.1)

Administrative Policy

2014 Ruling 2013-0479701R3 - Transfer of US dollar loan

Current structure

Holdco2, which is wholly-owned by Mr. X (a Canadian resident), made seven non-interest-bearing demand U.S-dollar loans...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 39 - Subsection 39(2) amendment of non-interest bearing loan to be interest-bearing 34
Tax Topics - Income Tax Act - Section 40 - Subsection 40(2) - Paragraph 40(2)(g) - Subparagraph 40(2)(g)(ii) s. 40(2)(e.1) trumped s. 40(2)(g)(ii) so that US Loan ACB preserved 122
Tax Topics - Income Tax Act - Section 80.01 - Subsection 80.01(3) S. 40(2)(e.1) trumped s. 40(2)(g)(ii) so that US Loan ACB preserved 207

2012 Ruling 2011-0426051R3 - Debt Restructuring

Opco is a Canadian resource company whose liabilities far exceed the value of its assets. It is the indirect subsidiary of a foreign parent and...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 80.01 - Subsection 80.01(4) ATR-66 debt tuck-under and wind-up transactions 354

Articles

Mike J. Hegedus, "Paragraph 40(2)(e.1) Versus Subparagraph 40(2)(g)(ii): Potential Conflict?", Resource Sector Taxation (Federated Press), Vol. IX, No. 4, 2014, p.684.

2013-0479701R3 may not have dealt with conflict between s. 40(2))(g)(ii) and s. 40(2)(e.1) (pp. 686-7)

In the third and most recent ruling, the...

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Paragraph 40(2)(f)

Administrative Policy

S3-F9-C1 - Lottery Winnings, Miscellaneous Receipts, and Income (and Losses) from Crime

Lottery Schemes

1.17 Paragraph 40(2)(f) specifies that no taxable capital gain or allowable capital loss results from the disposition of a chance...

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Paragraph 40(2)(g)

Administrative Policy

7 October 2021 APFF Roundtable Q. 15, 2021-0901051C6 F - Exemption pour résidence principale

An individual held vacant land from 1990 to 1999 and then occupied a new home constructed thereon as the individual’s principal residence from...

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Subparagraph 40(2)(g)(ii)

Cases

Service v. Canada, 2005 DTC 5281, 2005 FCA 163

The taxpayer, who was a minority shareholder of a corporation ("Homage") engaged in a condominium development project, lent money directly to...

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Rich v. Canada, 2003 DTC 5115, 2003 FCA 38

In finding that the taxpayer was entitled to recognize a business investment loss on an interest-bearing loan made by him to a company ("DSM")...

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Byram v. Canada, 99 DTC 5117, [1999] 2 CTC 149 (FCA)

The taxpayer was able to deduct losses sustained on interest-free loans made by him to a U.S. operating company of which he was initially a direct...

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Cadillac Fairview Corp. Ltd. v. Canada, 99 DTC 5121, [1999] 3 CTC 353 (FCA)

he taxpayer was unable to recognize a capital loss in respect of its guarantees of bank loans made to real estate partnerships in which fifth-tier...

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Bosa Bros. Construction Ltd. v. The Queen, 96 DTC 6193 (FCTD)

Interest-free advances that the taxpayer made to its U.S. subsidiary were found not to have been made to earn income (e.g., acquiring a product or...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Onus 132
Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Depreciable Property 111
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(p) - Subparagraph 20(1)(p)(ii) interest-free advances to US sub by developer 35
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Real Estate sale of stratified title property 1 year later on capital account/ secondary intention re ill-affordable property 210

Brown v. The Queen, 96 DTC 6091 (FCTD)

The taxpayer made interest-free loans to a real estate corporation owned by him and others that were used to fund the corporation's obligations to...

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Smith v. The Queen, 93 DTC 5351, [1993] 2 CTC 257 (FCA)

No deduction was available under s. 50(1)(a) in respect of a loan made by a corporation to an affiliate in the absence of any evidence that the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) benefit concurred in by taxpayer was not taxable under s. 56(2) as it was taxable to the recipient 241

The Queen v. Lalonde, 84 DTC 6159 (FCTD), aff'd 89 DTC 5286 (FCA)

Two doctors made interest-free advances to a non-profit corporation which had been established to construct and operate an old-age home. Since...

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See Also

Fiducie Immobilière J.P. v. The Queen, 2022 CCI 7

The appellant, a non-testamentary discretionary trust, made non-interest bearing loans to two companies (“Roseau” and “Spec”) which were...

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Coveley v. The Queen, 2014 DTC 1041 [at 2771], 2013 TCC 417, aff'd 2014 FCA 281

The taxpayers ("Michael and Solbyung"), were a married couple employed by a technology research corporation ("cStar"), and Solbyung was also a...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 50 - Subsection 50(1) bad debt claim, but business as usual 120

Audet v. The Queen, 2012 DTC 1208 [at 3556], 2012 TCC 162 (Informal Procedure)

The taxpayer, a certified general accountant, guaranteed a loan to one of his clients ("Cuisine Gourmet"), for which he became liable to pay...

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MacCallum v. The Queen, 2011 DTC 1225 [at 1308], 2011 TCC 316

A corporation owned by the taxpayer and his wife wholly owned a trucking corporation ("D & N"), and his son wholly owned a small business...

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Scott v. The Queen, 2010 TCC 401, 2010 DTC 1273 [at 3910]

The taxpayer made a loan to a corporation owned by his son and daughter-in-law, whose business failed. Boyle J. allowed the loss because, while...

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Alessandro v. The Queen, 2007 DTC 1373, 2007 TCC 411

The taxpayer had satisfied the burden of showing that loans advanced by her to a corporation of which she was only an indirect shareholder but for...

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Daniels v. The Queen, 2007 DTC 883, 2007 TCC 179

The taxpayer and his brother used money borrowed by them from the Royal Bank of Canada to purchase debentures from a Canadian-controlled private...

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Kyriazakos v. The Queen, 2007 DTC 373, 2007 TCC 66

Non-interest bearing advances that the taxpayer had made to a corporation after she had sold its shares to a friend were found not to have been...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 50 - Subsection 50(1) no attempt to collect was reasonable 132

Toews v. The Queen, 2005 DTC 1359, 2005 TCC 597

The recognition of a loss realized by the taxpayer on a non-interest bearing loan made by him to a company owned by a family trust was denied...

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Proulx-Drouin v. The Queen, 2005 DTC 487, 2005 TCC 116

When the taxpayer paid under her guarantee of debts owing by her husband's corporation, she became a creditor of the corporation by subrogation....

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Bernier v. The Queen, 2004 DTC 3235, 2004 TCC 376

The taxpayer was entitled to recognize under s. 39(2) capital losses incurred in a Bahamian margin account when U.S.-dollar margin loans were...

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Joncas v. The Queen, 2004 DTC 2315, 2005 TCC 647 (Informal Procedure)

Interest-bearing advances made by the taxpayer to a cooperative corporation of which he was a member were found to have been made for the primary...

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MacKay v. The Queen, 2003 DTC 748 (TCC)

After a corporation of which the taxpayer was a significant shareholder entered into a period of financial difficulty, the taxpayer followed the...

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Gordon v. The Queen, 96 DTC 1554, [1996] 3 CTC 2229 (TCC)

The taxpayer caused two related corporations ("Grandview" and "Formete") to advance funds on behalf of a corporation ("Engineering") owned by the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 39 - Subsection 39(12) 85

Burns v. The Queen, 94 DTC 1370, [1994] 1 CTC 2364 (TCC)

Five siblings, including the taxpayer, loaned money on a non-interest bearing basis to a corporation ("WFC") as part of transactions that resulted...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 50 - Subsection 50(1) 111

National Developments Ltd. v. The Queen, 94 DTC 1061 (TCC)

The taxpayer, which was a significant shareholder of a Minnesota corporation ("K-Tel") agreed along with another major shareholder ("Tri-State")...

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W.F. Botkin Construction Ltd. v. The Queen, 93 DTC 448, [1993] 1 CTC 2765 (TCC)

The purchase price for the sale of the taxpayer's business to a corporation owned by the children of the taxpayer's shareholder was financed by...

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Glass v. MNR, 92 DTC 1759 (TCC)

Pursuant to a written agreement with the existing shareholders, the taxpayer purchased 25% of the shares of a land development corporation for...

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Madaline v. MNR, 91 DTC 1451, [1991] 2 CTC 2658 (TCC)

A loss on a guarantee given by the taxpayer of a loan to his son's business was not made for the purpose of gaining or producing income but,...

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O'Blenes v. MNR, 90 DTC 1068, [1990] 1 CTC 2171 (TCC)

At the time that the taxpayer guaranteed amounts owing by a corporation of which her husband was the shareholder and officer, "she was not...

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Business Art Inc. v. MNR, 86 DTC 1842, [1987] 1 CTC 2001 (TCC)

Interest-free loans which the taxpayer made to a U.K. subsidiary, which had been established to purchase supplies in the U.K. for resale to the...

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Administrative Policy

21 June 2007 Internal T.I. 2007-0239681I7 F - perte sur prêts irrécouvrables

In 1999, an individual, Mr. A, acquired shares of a small business corporation (the "Corporation") through his RRSP, and subsequently, personally...

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14 June 2017 External T.I. 2016-0666411E5 - Negative returns on investments

A Canadian-resident taxpayer purchases a negative yield bond for $102 and will receive $100 when it matures in five years. The bond does not pay...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Loans and Financing Charges negative interest is deductible under s. 9 if there is a reasonable expectation of receiving (positive) interest 152
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(i) negative interest not a contra to positive interest 150

S4-F8-C1 - Business Investment Losses

1.46 ... Where a shareholder provides a guarantee or loan to a corporation in order to provide it capital, a clear connection will generally exist...

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16 June 2016 Internal T.I. 2015-0597971I7 F - Perte réputée nulle - loss deemed nil

Mrs. A, F1 and F2 held, as co-owners, a building whose sole tenant was Corporation, which was owned by Mrs. A. F1 and F2 advanced sums (the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 39 - Subsection 39(1) - Paragraph 39(1)(c) BIL potentially could be recognized on a non-interest bearing loan made to a corporation in which the taxpayer had no equity 0

2014 Ruling 2013-0479701R3 - Transfer of US dollar loan

Holdco2, which is wholly-owned by a Canadian resident individual, made a non-interest-bearing demand U.S-dollar loans (the "US Loan") to the ...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 39 - Subsection 39(2) amendment of non-interest bearing loan to be interest-bearing 34
Tax Topics - Income Tax Act - Section 40 - Subsection 40(2) - Paragraph 40(2)(e.1) s. 40(2)(e.1) trumped s. 40(2)(g)(ii) so that US Loan ACB preserved 207
Tax Topics - Income Tax Act - Section 80.01 - Subsection 80.01(3) S. 40(2)(e.1) trumped s. 40(2)(g)(ii) so that US Loan ACB preserved 207

6 May 2014 Internal T.I. 2014-0524651I7 - Loss on conversion

Canco indirectly controlled ULC which was the sole member (holding common membership units) of LLC. ULC also held non-interest-bearing Notes...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 51 - Subsection 51(1) s. 51 applies where issuer had a cash redemption override 208
Tax Topics - Income Tax Act - Section 51 - Subsection 51(1) conversion not under Note terms 185

8 July 2013 Internal T.I. 2012-0434991I7 F - Déductibilité d'une perte

As a sideline activity to the practice of his profession, Mr. A and his partners made loans, an activity which required little time in comparison...

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Other locations for this summary
Tax Topics - Income Tax Act - Section 40 - Subsection 40(2) - Paragraph 40(2)(g) - Subparagraph 40(2)(g)(ii) per jurisprudence on guarantees, taxpayer’s reason for assuming an obligation (to protect an interest-bearing investment) must be examined
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(p) - Subparagraph 20(1)(p)(ii) ordinary business requirement looks to the presence of an organized and continuous system 251

6 December 2012 External T.I. 2012-0463431E5 F - Application of subparagraph 40(2)(g)(ii)

Creditor and Debtor were wholly-owned subsidiaries of the same parent. Creditor made interest-free loans (the "Debts") to Debtor, and subsequently...

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2012 Ruling 2010-0386201R3 - Tower structure capitalized by interest-free loans

Existing structure

Canco, which is a privately-owned taxable Canadian corporation, holds a US limited liability limited partnership ("LLLP")...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 95 - Subsection 95(2) - Paragraph 95(2)(i) non-interest-bearing loans is made for income producing purposes: generating dividends 890

4 September 2007 Internal T.I. 2007-0237791I7 F - Gain et perte sur taux de change

CRA found that any FX loss realized on a USD loan to the taxpayer’s parent would be denied under s. 40(2)(g)(ii).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 40 - Subsection 40(1) - Paragraph 40(1)(a) - Subparagraph 40(1)(a)(i) USD loan to parent no longer represented money on deposit, so that funds movement generated FX gain or loss 269

9 June 2005 Internal T.I. 2005-0122511I7 F - Créance irrécouvrable dans une OSBL

Before finding that a loss on an interest-bearing loan made by a director of a not-for-profit organization to the NPO that became a bad debt when...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 39 - Subsection 39(1) - Paragraph 39(1)(c) - Subparagraph 39(1)(c)(iv) loss on interest-bearing loan made by a director to an NPO qualified as BIL if NPO qualified as SBC 108

14 January 2004 External T.I. 2003-003875

CRA has accepted the decision in Byram so that, in its view, when the debtor is a wholly-owned subsidiary of the taxpayer, a clear nexus between...

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17 December 1996 Internal T.I. 9634547 - DISPOSITION OF EMPLOYMENT BONUS NOTES

A loss realized by an employee from the disposition of notes received by him from his employer in lieu of a cash bonus would not be subject to the...

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Halifax Round Table, February 1994, Q. 1

A loss realized by a shareholder of a small business corporation on the sale of a non-interest bearing loan to an arm's length party may be...

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23 December 1993 Income Tax Severed Letter 9317905 - Allowable Business Investment Loss

Discussion of when a shareholder can recognize a capital loss on a non-interest bearing loan owing to her by the corporation where the shareholder...

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91 C.R. - Q.35

Where a holding company is required to have an interest-free debt owing to it by Opco settled for an amount less than its ACB as a condition to...

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21 August 1991 T.I. (Tax Window, No. 8, p. 22, ¶1397)

A director's loss under s. 227.1 will be non-deductible by virtue of s. 40(2)(g).

12 September 1990 T.I. (Tax Window, Prelim. No. 1, p. 10, ¶1016)

Where A transferred a non-interest-bearing debt at a loss to its affiliate, B, and B then sold the debt in an arm's length transaction, the loss...

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15 September 89 Memorandum (February 1990 Access Letter, ¶1105)

The position in IT-445 respecting interest-free loans is still supportable. The Business Art case, in which a Canadian corporation was allowed to...

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1 September 89 T.I. (February 1990 Access Letter, ¶1106)

Where a wife guaranteed for no consideration a bank loan to her husband's corporation in which she was not a shareholder, she was unable to claim...

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22 Aug. 89 T.I. (Jan. 90 Access Letter, ¶1078)

In light of the Canada Safeway and DWS cases, RC does not accept that when a shareholder incurs a debt to his corporation he does so to indirectly...

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81 C.R. - Q.4

Guidelines in the case of a guarantee granted a lender by a sole shareholder of the borrower for no compensation.

IT-239R2 "Deductibility of Capital Losses from Guaranteeing Loans for Inadequate Consideration and from Loaning Funds at less than a Reasonable Rate of Interest in Non-arm's Length Circumstances"

6. Where a taxpayer has loaned money at less than a reasonable rate of interest to a Canadian corporation of which he is a shareholder, or to its...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 246 - Subsection 246(1) 46

IT-390 "Unit Trusts - Cost of Rights and Adjustments to Cost Base"

A capital loss arising when additional units are issued in settlement of a unit holder's right to receive a distribution of a capital gain of the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 52 - Subsection 52(6) 0

Articles

Reid, "Capital and Non-Capital Losses", 1990 Conference Report, c. 16

Discussion of deductibility of losses arising from amounts paid under guarantees.

Subparagraph 40(2)(g)(iii)

Administrative Policy

7 October 2016 APFF Financial Strategies and Instruments Roundtable Q. 4, 2016-0651791C6 F - Choix 45(2) et (3) - immeuble à logements

At civil law, land and building are a single property (although this rule is overridden for CCA/recapture purposes). Consequently, if a duplex...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 45 - Subsection 45(3) invalidity of s. 45(3) elections on duplex units applied only for changes of use after February 21, 2012 185
Tax Topics - Income Tax Act - Section 54 - Personal-Use Property land underlying duplex used 40% personally is not personal-use property 233
Tax Topics - Income Tax Regulations - Regulation 1102 - Regulation 1102(2) Reg. 1102(2) deems building to be separate from land and does not bifurcate the land 176

Subsection 40(3) - Deemed gain where amounts to be deducted from adjusted cost base exceed cost plus amounts to be added to adjusted cost base

Administrative Policy

30 October 2014 External T.I. 2013-0488881E5 - Upstream Loan

Where Canco receives a s. 90(9)(a) notional dividend as a result of a loan from a 2nd tier FA (FA2), it will not be credited for s. 90(9)...

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8 October 2010 Roundtable, 2010-0373461C6 F - Retrait d'une société de personnes

Where a general partner whose units have a negative ACB has his units redeemed equally over the course of five years, 20% of the negative ACB will...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 100 - Subsection 100(2) negative ACB realized pro rata under s. 100(2) as portion of the units are redeemed each year 201
Tax Topics - Income Tax Act - Section 43 - Subsection 43(1) all the partner’s units are a single property 81
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Property partnership unit is not separate property from other units 57

Rulings Directorate Discussion and Position Paper on Motion Picture Films and Video Tapes as Tax Shelters, Version 29/3/93 930501 (C.T.O. "Motion Picture Films - C.C.A.")

Discussion in Appendix of techniques for postponement of realization of negative ACB by investors in film limited partnership. RC also states that...

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Articles

Melanie Huynh, Eric Lockwood, "Foreign Affiliates and Adjusted Cost Base", 2007 Canadian Tax Journal, Issue No. 1

Effect of negative ACB gains on CFA shares that are excluded property

  • Canco, wholly-owns CFA 1, which wholly-owns CFA 2. A Canadian dollar (but...

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Subsection 40(3.1) - Deemed gain for certain partners

See Also

Gladwin Realty Corporation v. The Queen, 2019 TCC 62, aff'd 2020 FCA 142

The taxpayer, a private real estate corporation, rolled a property under s. 97(2) into a newly-formed LP, with the LP then distributing to the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) using the CDA and negative ACB rules to generate “over-integration” was abusive 594
Tax Topics - Income Tax Act - Section 89 - Subsection 89(1) - Capital Dividend Account - Paragraph (a) contrary to purpose of the capital dividend rules to fully exempt a capital gains distribution 300
Tax Topics - Income Tax Act - Section 123.3 no CRA challenge to continuance to BVI to avoid s. 123.3 tax 96

Administrative Policy

27 June 2016 External T.I. 2016-0637341E5 F - Partnerships - Negative ACB

Rather than making current distributions of its cash flow to a limited partner, those sums are lent by the LP to the limited partner – then at...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 53 - Subsection 53(2) - Paragraph 53(2)(c) - Subparagraph 53(2)(c)(v) loan advances to a limited partner may give rise to immediate s. 53(2)(c)(v) grind 261
Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.13) retention of partnership profits not a contribution 150
Tax Topics - Income Tax Act - Section 53 - Subsection 53(1) - Paragraph 53(1)(e) - Subparagraph 53(1)(e)(iv) assumption of loan can be contribution, but not retained profits 177

18 June 2014 External T.I. 2011-0417491E5 - Non-resident's partnership interest

A non-resident corporation (NRco) is deemed under s. 40(3.1)(a) to realize a gain in respect of its limited partnership interest in P, which is...

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15 December 2010 External T.I. 2009-0349911E5 F - Calcul du PBR d'une participation dans une SEC

In February 2008, a limited partnership (“LP”) realized a capital gain, of which $100,000 was allocable to Limited Partner A, whose interest...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 53 - Subsection 53(1) - Paragraph 53(1)(e) - Subparagraph 53(1)(e)(i) no ACB bump for gains realized in the year until Day 1 of following year 98

Subsection 40(3.12) - Deemed loss for certain partners

Administrative Policy

3 July 2012 External T.I. 2012-0449701E5 - Subsection 40(3.12) and tiered ptnshps

As s. 40(3.12) is limited to corporations, individuals (other than trusts) and testamentary trusts:

[a]n election under subsection...

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Articles

Joint Committee, "Response to Green case", 19 January 2018 Joint Committee Submission to Finance respecting the Green case

Desirability of extending relief from negative ACB gains

Although s. 40(3.12) is intended to address the problem of negative ACB arising from...

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Subsection 40(3.13)

Administrative Policy

27 June 2016 External T.I. 2016-0637341E5 F - Partnerships - Negative ACB

Rather than making current distributions of its cash flow to a limited partner, those sums are lent by the LP to the limited partner – then at...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 53 - Subsection 53(2) - Paragraph 53(2)(c) - Subparagraph 53(2)(c)(v) loan advances to a limited partner may give rise to immediate s. 53(2)(c)(v) grind 261
Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.1) loans by LP to partner potentially gave rise to negative ACB gain 168
Tax Topics - Income Tax Act - Section 53 - Subsection 53(1) - Paragraph 53(1)(e) - Subparagraph 53(1)(e)(iv) assumption of loan can be contribution, but not retained profits 177

Subsection 40(3.14)

Paragraph 40(3.14)(a)

Administrative Policy

11 October 2013 APFF Roundtable, 2013-0495861C6 F - Question 20 - APFF Round Table

In the course of a general discussion, CRA stated:

In order not to qualify as a limited partner pursuant to paragraph 40(3.14)(a), it is...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Specified Member specified member status determined re involvement in daily management or activities 93

Articles

Lorenzo Bonanno, Guy Buckley, "Limited Liability Partnerships", Canadian Tax Highlights, Vol. 25, No. 2, February 2017, p. 7

Partial v. full-shield protection (p. 7)

Partial-shield protection limits liability from…liabilities….only…arising from the negligence of...

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Geneviève C. Lille, Elizabeth J. Johnson, "Partnerships: An Update", 2010 Conference Report (Toronto: Canadian Tax Foundation, 2011), 36:1-62

2003 comfort letter indicating that “full shield” partnerships were intended to be caught (p. 36:16)

A comfort letter from the Department of...

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Subsection 40(3.15) - Excluded interest

Administrative Policy

24 June 2014 External T.I. 2014-0524331E5 - definition of excluded interest

The Canadian "Partnership," which had operated its residential apartment building since 1988 without any expansion to or changes in its...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.16) distribution not a qualifying use 127

13 April 2004 External T.I. 2003-0052291E5 F - Participation exclue - Par. 40(3.15) de la Loi

A limited partnership formed before February 22, 1994 that generated business income from residential rental properties then entered into a...

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22 May 1998 External T.I. 9806575 - EXCLUDED INTEREST

Where a partnership owns shares that are held for the purpose of earning income but out of which dividends are not declared in each year of their...

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Subsection 40(3.16) - Amounts considered not to be substantial

Administrative Policy

24 June 2014 External T.I. 2014-0524331E5 - definition of excluded interest

The Canadian "Partnership," which had operated its residential apartment building since 1988 without any expansion to or changes in its...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.15) 40% indebtedness increase to below original amount was "substantial" 86

Subsection 40(3.3) - When subsection (3.4) applies

Administrative Policy

6 October 2017 APFF Financial Strategies and Instruments Roundtable Q. 10, 2017-0705201C6 F - Capital loss - repayment of loan

On the repayment (on maturity) of a U.S.-dollar loan that had been received from an affiliated trust, the borrower sustains a foreign exchange...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Property foreign currency is not property for purposes of the suspended-loss rules 184

3 February 2016 Internal T.I. 2015-0588791I7 - Meaning of substituted property

LLC1, which is wholly owned by a Canadian partnership, held 49.9% of the units in LLC3 - with a further 0.1% held by LLC2 (a wholly-owned...

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6 January 2009 Internal T.I. 2008-0280111I7 - FX loss on disposition of cash

A Bermuda CFA (Forco) maintains U.S. dollar deposits and realizes FX losses when it uses such cash to pay a dividend or to make a loan. CRA...

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2007 Ruling 2007-0245281R3 - windup of income trust on sale of assets:3rd party

This contemplated the winding-up of an income fund (the "Fund") following its acquisition by a "Bidco" in which the Fund sold its assets (mostly...

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21 March 2007 External T.I. 2004-0091061E5 - stop loss rules for depreciable property

After indicating that s. 13(21.2) would not apply to a transfer of depreciable property from a personal trust to a person affiliated with the...

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Articles

Marc Ton-That, Rick McLean, "Navigating the Stop-Loss Rules", Corporate Structures and Groups, Vol. VI, No. 3, p. 324.

Subsection 40(3.4) - Loss on certain properties

Administrative Policy

27 October 2014 Internal T.I. 2014-0534981I7 F - Subsection 40(3.4)

Canco 1 ("C1") disposed of its interest in a partnership ("P") in its 2008 taxation year to a corporation ("C2") which was affiliated under s....

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2 July 2014 External T.I. 2014-0529731E5 F - Stop-loss Rules

In Scenario 1, Investco acquires 1,000 common shares of Pubco on January 1, 201X and acquires a further 200 shares on December 15, 201X. Pubco...

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28 November 2010 CTF Annual Roundtable Q. 8, 2010-0386311C6 - Subsection 40(3.4)

does the deemed existence of a partnership in the postamble to s. 40(3.4) apply for other purposes of the Act, e.g., subdivision j? CRA...

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6 October 2011 External T.I. 2011-0399611E5 - Subsections 40(3.3) and 40(3.4)

After referring to 2001-008815, which indicated that a taxpayer was permitted to recognize 99% of its capital loss when it acquired 100 shares of...

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2010 Conference Report CRA Round Table, Q. 8 [not carried forward to Income Tax Technical News, No. 44]

The postamble in s. 40(3.4) was added to ensure that a previously suspended loss of a partnership could be reported "at the later time set out...

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18 March 2003 External T.I. 2003-0002915 F - Subsections 40(3.3) & 40(3.4)

Since the beginning of 2002, Holdco held 1,000 shares of a public company with an ACB of $10,000. On December 16, 2002, it sold 200 shares to an...

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4 July 2001 External T.I. 2001-0088155 - Subsection 40(3.4)

Respecting the situation where the taxpayer purchases 100 common shares of XYZ Co on January 1, 2001 and sells 99 shares on January 25, 2001...

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Paragraph 40(3.4)(b)

Subparagraph 40(3.4)(b)(i)

Administrative Policy

30 April 2019 Internal T.I. 2019-0793481I7 - Application of Paragraph 40(3.4)(b)

ACo, a Canadian public corporation, held the shares of three controlled foreign affiliates (CCo, DCo and BCo directly. Shares (that were excluded...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.5) - Paragraph 40(3.5)(c) - Subparagraph 40(3.5)(c)(i) a loss that was suspended under s. 40(3.5)(c)(i), can be de-suspended by winding-up the CFA referenced under s. 40(3.5)(c)(i) 198

Subsection 40(3.5) - Deemed identical property

See Also

10737 Newfoundland Limited v. The Queen, 2011 DTC 1255 [at 1460], 2011 TCC 346

The taxpayer held shares of a Canadian corporation which, under their terms and a related agreement, were exchangeable on a one-for-one basis into...

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Cascades Inc. v. The Queen, 2008 DTC 2387, 2007 TCC 730

The taxpayer transferred all its shares of a public company ("PII") of which it was the controlling shareholder to a wholly-owned subsidiary of...

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Administrative Policy

14 March 2003 Internal T.I. 2003-0182977 F - 40(3.5)(c)

Where a public corporation ("Parentco") holding shares of a public corporation ("Subco") with an accrued loss, sells the shares to a...

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Articles

Carrie Smit, "Exchangeable Shares: Not Just Rights to Foreign Shares", CCH International Tax, No. 59, August 2011, p. 1

In discussing the 10737 Newfoundland case, notes that "the recognition of an exchangeable share as the particular property disposed of (as opposed...

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Paragraph 40(3.5)(b)

Administrative Policy

26 January 2018 Internal T.I. 2017-0735771I7 - Application of paragraph 40(3.5)(c)

Canco realized a suspended loss when it contributed its shares of a controlled foreign affiliate (CCo) to another CFA (BCo), and then took the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.5) - Paragraph 40(3.5)(c) - Subparagraph 40(3.5)(c)(i) a suspended loss on the sale of CFA1 to CFA2 was not de-suspended on s. 95(2)(e) wind-up of CFA1 into CFA2 478
Tax Topics - Income Tax Act - Section 95 - Subsection 95(2) - Paragraph 95(2)(e) S. 95(2)(e) wind-up constructively resulted in formation of new corporation 79

16 October 2009 Internal T.I. 2009-0337721I7 F - Perte lors de fusion étrangère

Holdco, a CCPC, received shares of the foreign merged corporation in replacement of its shares of a public American company, and elected in an...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 87 - Subsection 87(8) claiming of capital loss in promptly-filed amended return would be accepted as an election 223

Paragraph 40(3.5)(c)

Cases

Canada v. Cascades Inc., 2009 DTC 6122, 2009 FCA 135

The trial judge had found that the stop-loss rule in s. 40(3.4) did not apply to the disposition by the taxpayer of shares of a subsidiary ("PII")...

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Words and Phrases
apply

Subparagraph 40(3.5)(c)(i)

Administrative Policy

29 July 2020 Internal T.I. 2020-0852071I7 - Clarification of views noted in 2019-0793481I7

A Canadian corporation (ACo) realized a suspended loss when it contributed its shares (i.e., in a drop-down to which s. 85.1(3) did not apply) of...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 95 - Subsection 95(2) - Paragraph 95(2)(e) - Subparagraph 95(2)(e)(v) - Clause 95(2)(e)(v)(A) - Subclause 95(2)(e)(v)(A)(III) a loss that was suspended under s. 40(3.5)(c)(i), could not be de-suspended by a DLAD winding-up of the CFA referenced under s. 40(3.5)(c)(i) 496

30 April 2019 Internal T.I. 2019-0793481I7 - Application of Paragraph 40(3.4)(b)

Canco realized a suspended loss when it contributed its shares of a controlled foreign affiliate (CCo) to another CFA (BCo), and then took the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.4) - Paragraph 40(3.4)(b) - Subparagraph 40(3.4)(b)(i) loss was de-suspended when CFA-formed-on-merger for purposes of s. 40(3.5)(c)(i) was wound-up 387

25 June 2018 Internal T.I. 2017-0737151I7 - Application of paragraph 40(3.5)(c)

CCo was a non-resident private unlimited company and holding company whose ordinary shares were held by ACo (a Canadian-resident corporation that...

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Locations of other summaries Wordcount
Tax Topics - Statutory Interpretation - Interpretation Act - Subsection 33(2) reference to merger to form one corporation included three 110

26 January 2018 Internal T.I. 2017-0735771I7 - Application of paragraph 40(3.5)(c)

ACo, a Canadian public corporation, held the shares of three controlled foreign affiliates (CCo, DCo and BCo directly. Shares (that were excluded...

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Words and Phrases
merger formed
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.5) - Paragraph 40(3.5)(b) scope of s. 40(3.5)(b) extends to mergers and constructive formation of new entities 443
Tax Topics - Income Tax Act - Section 95 - Subsection 95(2) - Paragraph 95(2)(e) S. 95(2)(e) wind-up constructively resulted in formation of new corporation 79

16 May 2018 IFA Roundtable Q. 5, 2018-0745501C6 - Meaning of “merged or combined” in 40(3.5)(c)(i)

Canco sold all the shares of FA to Canco’s wholly-owned subsidiary (Subco) and realized a capital loss that was suspended under s. 40(3.4). In...

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Words and Phrases
merged or combined formed
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 88 - Subsection 88(3) s. 88(3) wind-up of CFA formed a new corporation 173

Articles

Ian Bradley, Jonathan Bright, "The Stop-Loss Rules and Corporate Reorganizations – Interpretive Challenges", Canadian Tax Journal, (2019) 67:2, 383-410

Interpretation of "merger or combination" (pp. 391, 394, 396)

The CRA's interpretation of subparagraph 40(3.5)(c)(i) [in 2017-073715117] is based...

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Words and Phrases
merger combination winding-up

Subsection 40(3.6) - Loss on shares

See Also

Canadian Imperial Bank of Commerce v. The Queen, 2021 TCC 71

The taxpayer (“CIBC”) subscribed US$1 billion on November 8, 2006 for 1,000 Class B common shares of a Delaware subsidiary (“DHI”) and on...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 39 - Subsection 39(2) s. 39(2) historically applied only to FX gains or losses on liabilities and foreign currency dispositions 275
Tax Topics - General Concepts - Stare Decisis statement not obiter if it is an essential part of the Court’s reasoning 185
Tax Topics - Statutory Interpretation - Prior Cases presumption that Parliament enacts with a knowledge of the jurisprudence 93

Administrative Policy

12 January 2015 Internal T.I. 2014-0560421I7 - FX losses on CFA wind-up

In 2014-0538591I7, the Directorate indicated that s. 40(3.6) did not apply to deny a loss realized on the winding-up of a controlled foreign...

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10 October 2014 APFF Roundtable, 2014-0538241C6 F - 75(2) and definition of "earned income" in 146(1)

X, who is the sole beneficiary of a protective trust, holds voting shares of a corporation giving him control thereof, with the trust holding...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 146 - Subsection 146(1) - Earned Income character preservation of s. 75(2) attributed income 122
Tax Topics - Income Tax Act - Section 75 - Subsection 75(2) character preservation of attributed income/basis adjustment for denied capital loss at trust level 446

15 August 2014 Internal T.I. 2014-0538591I7 - FX losses on CFA wind-up

A Canadian-resident corporation did not elect under s. 88(3.1) for the winding-up of its wholly-owned controlled foreign affiliate (CFA) to be a...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 93 - Subsection 93(2.01) no reduction under s. 93(2.01)(a) if no exempt dividend 132

23 April 2012 Internal T.I. 2012-0436921I7 - Capital Losses

The Canadian parent's shares of a US subsidiary were redeemed, and it claimed a capital loss under s. 39(2). CRA found that s. 40(3.6) and s....

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9 January 2012 External T.I. 2011-0427461E5 F - Attribution Rules and Suspended Loss Rules

Ms. A and her spouse, Mr. B, each held 50% of the common shares of Opco, with Ms. A also holding Opco preferred shares with a paid-up capital...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 74.2 - Subsection 74.2(1) stop-loss rule in s, 40(3.6) trumped s. 74.2(1) so that denied capital loss was added to transferee spouse’s common share ACB 278

31 August 2005 Internal T.I. 2005-0134831I7 F - Capital Gains Exemption Strip

S. 84.1 did not apply to individuals transferring preferred shares – whose ACB previously had been stepped up by them under s. 110.6(2.1) - to...

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Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(1) - Paragraph 84.1(1)(a) s. 84.1 did not apply to transferring crystallized preferred shares’ ACB to common shares under s. 40(3.6)(b), with those shares exchanged for high-PUC prefs of new Holdcos for cash redemption 565
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) the use of s. 40(3.6)(b) for surplus-stripping purposes would be referred to the GAAR Committee 122

16 January 2003 External T.I. 2002-0151025 - Subsection 40(3.6)

Where an estate of the deceased acquires a controlling bloc of shares of a corporation that was controlled by the deceased and the shares are then...

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29 March 2001 External T.I. 2001-0074145 - Affiliated persons & stop loss rules

Where the shares of a corporation are owned equally by four trusts having the same corporate trustee, s. 40(3.6) will apply to deny a capital loss...

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13 October 2000 Internal T.I. 2000-0031107 - Post Martem Estate Planning

"Subsection 40(3.6) will not generally apply where all the shares of a corporation held by an estate are disposed of to the corporation which,...

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Articles

Steve Suarez, Pooja Samtani, "Using Exchangeable Shares in Inbound Canadian Transactions", 2007, 48:13, Tax Notes Int'l 1281 (The authors describe an "exchangeable share" as "a share of a Canadian corporation... that, together with some ancillary rights, replicates as closely as possible the economics (and to some extent the legal rights engaged by holders) of a share of another corporation.")

Kevin Wark, "Corporate-Owned Insurance: Revisiting Share Redemption Arrangements", CALU Report, August 2004.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 112 - Subsection 112(3.2) 0

Subsection 40(3.61) - Exception — estate loss carried back

Administrative Policy

2021 Ruling 2021-0895631R3 - Post-mortem planning - Hybrid Pipeline

Preliminary transactions to pipeline transactions entailed the subject corporation (a portfolio investments company) using its CDA account (which...

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Tax Topics - Income Tax Act - Section 84 - Subsection 84(2) 2-year pipeline transactions 226

26 November 2020 STEP Roundtable Q. 5, 2020-0847181C6 - Subsections 40(3.61) and 164(6)

On the death of the taxpayer, he realized a $4.9 million capital gain under s. 70(5) on his common shares of PrivateCo. Capital gains were also...

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Tax Topics - Income Tax Act - Section 164 - Subsection 164(6) - Paragraph 164(6)(a) s. 164(6)(a) applied before s. 40(3.61) so as to avoid iterative grind of s. 164(6) carryback amount 276

2019 Ruling 2019-0822951R3 F - Post-mortem Hybrid Pipeline

Preliminarily to pipeline transactions, the CCPC that had been held by the deceased (ACo) will purchase for cancellation (in consideration for...

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Tax Topics - Income Tax Act - Section 84 - Subsection 84(2) pipeline transaction for marketable securities company that includes full use of the ERDTOH/NERDTOH balances and s. 164(6) carryback 438

11 October 2013 APFF Roundtable, 2013-0493651C6 F - Affiliated persons and de facto control

All the voting common shares of Opco (carrying on an active business) are held by a discretionary inter vivos trust which was settled by the uncle...

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Tax Topics - Income Tax Act - Section 256 - Subsection 256(5.1) holding of relatively large note where debtor has a iliquid business could give rise to de facto control 260

Subsection 40(4) - Disposal of principal residence to spouse or trust for spouse

See Also

Levatte Estate v. The Queen, 2019 TCC 177

The appellant was the estate of Mr. Levatte, who died in 1995, and devised a residential property (the “Lynnbrook property”) to a spousal...

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Tax Topics - Income Tax Act - Section 162 - Subsection 162(1) penalty waived based on personal stress and the near miss 148

Administrative Policy

5 November 2014 External T.I. 2014-0521891E5 F - Résidence principale et copropriété

Two common-law spouses ("A" and "B") purchased a condominium as their principal residence (the "Residence"). A's will provided that the Residence...

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Tax Topics - General Concepts - Ownership whether a tacit co-ownership agreement is respected is a private law issue 126

30 May 2007 External T.I. 2006-0200271E5 F - Bien agricole et résidence principale

The correspondent’s mother died and, in her will, left all her property to her children, including a farm, on which there was a residence which...

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Tax Topics - Income Tax Act - Section 45 - Subsection 45(3) no change of use when occupant of residence moved into a nursing home 131
Tax Topics - Income Tax Act - 101-110 - Section 110.6 - Subsection 110.6(1.3) - Paragraph 110.6(1.3)(c) principally references over 50% of use 52

24 April 2006 External T.I. 2006-0166041E5 F - Transfert de biens entre époux séparés

In 1991, the spouses jointly purchased an immovable ("Immovable1" located in Canada which was intended to serve as their principal residence upon...

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Tax Topics - Income Tax Act - Section 74.5 - Subsection 74.5(3) separation judgment unnecessary for s. 74.5(3) election to avoid attribution 290

1 September 1995 External T.I. 9507695 - PRINCIPAL RESIDENCE PROVISIONS

Where a transfer of a home has occurred as described in s. 70(6), the surviving spouse will not automatically lose her entitlement to designate...

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14 July 1994 External T.I. 9405025 - GAIN ON PROPERTY TRANSFERRED FROM SPOUSE

Re application of ss.40(4) and (6) where a husband and wife jointly owned a cottage on December 31, 1971, husband in 1973 transferred his interest...

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23 June 1992 T.I. 920894 (December 1992 Access Letter, p. 13, ¶C38-248)

Discussion of the availability of the principal residence exemption in various situations where a married couple own a house and a cottage...

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7 March 1992 T.I. (Tax Window, No. 17, p. 7, ¶1786)

Re application of s. 40(4) and (6) where two properties each of which meet the definition of principal residence are owned in joint tenancy by...

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Paragraph 40(4)(b)

Subparagraph 40(4)(b)(i)

Administrative Policy

30 September 2010 Internal T.I. 2010-0373901I7 F - Bigamie fiscale - transfert de biens au décès

The taxpayer lived with his spouse in Immovables A, but thereafter commenced to live separate and apart from her, but did not divorce from her,...

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Tax Topics - Income Tax Act - Section 70 - Subsection 70(6) - Paragraph 70(6)(a) s. 70(6)(a) could apply simultaneously to the devise of House A to surviving spouse and of House B to surviving common-law partner 103

Subsection 40(6.1)

Administrative Policy

16 June 2017 External T.I. 2017-0698181E5 - New principal residence rules & trusts

The estate of Deceased Parent, that qualified as a graduated rate estate (GRE) with a fiscal period of July 1, 2016 to June 30, 2017, sold the...

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Subsection 40(7) - Property in satisfaction of interest in trust

Administrative Policy

89 C.R. - Q.25

The principle residence exemption is not available to a non-spouse trust on the disposition of a residential unit, regardless whether or not any...

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Subsection 40(10)

Administrative Policy

7 October 2016 APFF Roundtable Q. 17, 2016-0652781C6 F - Functional currency and acquisition of control

CRA noted that where a taxpayer with an elected functional currency (e.g., the USD) has an accrued FX loss on a debt obligation owing in another...

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Tax Topics - Income Tax Act - Section 111 - Subsection 111(4) - Paragraph 111(4)(e) FX gains or losses on pre-transition debts not affected 229
Tax Topics - Income Tax Act - Section 261 - Subsection 261(9) - Paragraph 261(9)(a) exclusion of pre-transition debts from s. 111(4) 98

Subsection 40(11)

Articles

Carrie Smit, "Foreign Currency Debts and Acquisitions of Control: Beware the Unexpected Gain", International Tax (Wolters Kluwer CCH), February 2017, No. 9, p. 6

If a restructuring of USD debt (with an accrued FX loss) of a Canadian debtor entails an acquisition of control of the debtor before the debt is...

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Tax Topics - Income Tax Act - Section 111 - Subsection 111(12) 495

Subsection 40(12) - Donated flow-through shares

Administrative Policy

19 January 2018 External T.I. 2017-0683501E5 - Flow-Through Shares

A taxpayer subscribes cash for a publicly listed common share (the “Share”) of a resource company, and donates it to a qualified donee....

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Tax Topics - Income Tax Act - Section 54 - Exemption Threshold taxpayer with no flow-through shares has no exemption threshold 194
Tax Topics - Income Tax Act - Section 38.1 general paraphrase 316

16 October 2012 External T.I. 2012-0437911E5 - Donation of flow-through shares

The taxpayer had acquired units in two flow-through share partnerships. Approximately two years after the offerings, the LPs would transfer their...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 38.1 148

14 May 2012 External T.I. 2011-0426631E5 - Donation of Flow-through Shares

CRA was asked to consider transactions in which a limited partnership holding flow-through shares transferred those shares to a mutual fund...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 38.1 112