Section 48

Subsection 48(1)


Davis v. The Queen, 80 DTC 6056, [1980] CTC 88 (FCA)

Article VIII of the 1942 Canada-U.S. Tax Convention [analogous to Article XIII of the 1980 Convention] only provided that a person who had become a resident of the United States, was not taxable in Canada by reason of capital gains made by him after becoming a U.S. resident. There accordingly was no conflict between Article VIII and section 48, which had "merely the effect of taxing the appellant ... on the fictitious basis that he [was] deemed, while he was a Canadian resident, to have made certain capital gains."

Administrative Policy

26 January 1999 External T.I. 5-981642 -

A testamentary trust is generally able to make the election under s. 48.1.

Discussion of requirement to flow-out the capital gain to the beneficiaries.

24 February 1993 Memorandum (Tax Window, No. 29, p. 19, ¶2456)

The possibility of a deferred gain being offset by the capital gains exemption must be ignored in determining the security to be deposited where an individual makes the election under s. 48(1)(c).

92 C.R. - Q.6

The minimum security acceptable under s. 48(1)(c) is the amount of tax deferred. RC will accept as security the assets for which the deemed disposition is to be deferred, and the election may be made regardless when the disposition of the assets actually occurs.

RC will accept a separate election in respect of one or more properties held by a particular taxpayer.

8 June 1990 T.I. (November 1990 Access Letter, ¶1515)

S.48(1)(c) does not provide for a contingent election, e.g., an election in respect of that number of shares of a corporation the disposition of which otherwise would result (depending upon the values) in a gain in excess of $100,000. In addition, acceptable security must be given at the time the election is filed.

87 C.R. - Q.79

RC normally prefers security that attaches to the assets subject to deferral, and this normally is achieved by completion of an acceptable declaration of trust.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 116 - Subsection 116(2) 17


Suarez, "Tax Planning for Departure from Canada", 1991 Canadian Tax Journal, p. 1.

Subsection 48(3)

Administrative Policy

2 November 1990 T.I. (Tax Window, Prelim. No. 2, p. 20, ¶1071)

Where a person holds a capital interest in a trust at the time of becoming a resident of Canada, the ACB of that interest is its fair market value at the time he became a resident. S.107(1.1) does not apply.

5 March 1990 T.I. (August 1990 Access Letter, ¶1383)

Where an NRO ceases to qualify as such, s. 48(3) will not apply to the shareholder's shares of the NRO if the NRO owns any property that is taxable Canadian property at the time the NRO ceased to qualify by virtue of one of its shareholders becoming a non-resident. [sic]

Subsection 48(5)

Administrative Policy

11 January 1991 T.I. (Tax Window, Prelim. No. 3, p. 17, ¶1088)

In computing the hypothetical foreign tax credit on the deemed disposition, any tax deductions or credits that would have been permitted in respect of operating losses or loss carryforwards had there been an actual disposition must be included.


Talakshi, "Corporate Migration", 1991 Canadian Petroleum Tax Journal, Spring 1991, p. 53.