Subsection 39(1) - Meaning of capital gain and capital loss
Paragraph 39(1)(a)
See Also
Staltari v. The Queen, 2015 DTC 1130 [at 818], 2015 TCC 123
A commercial real estate broker donated land to the City of Ottawa, received a charitable receipt for its appraised value and claimed that his...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Evidence | uncorroborated testimony | 99 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Business | no business where no business organization | 167 |
| Tax Topics - Income Tax Act - Section 38 - Paragraph 38(a.2) | land donated in order to achieve tax benefit was still a gift to a qualified donee | 133 |
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Real Estate | secondary intention to develop land irrelevant if land donated instead | 500 |
Rogers Estate v. The Queen, 2015 DTC 1029 [at 124], 2014 TCC 348
Pursuant to a share appreciation right ("SAR") attached to stock options granted by a public corporation which he controlled and of which he was...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) | cash surrender of employee stock options for their value was not shareholder benefit | 124 |
| Tax Topics - Income Tax Act - Section 5 - Subsection 5(1) | exercise of stock option surrender plan for FMV was not "remuneration" | 121 |
| Tax Topics - Income Tax Act - Section 7 - Subsection 7(3) - Paragraph 7(3)(a) | s. 7 a complete code for taxation of stock option benefits | 230 |
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Options | holding one's employee stock options until just before they expire is not typical of an adventure in the nature of trade | 185 |
Administrative Policy
4 November 2008 External T.I. 2008-0264181E5 - Income recognition and ACB - trust units
Where a corporation with an October 31 year end receives income distributions from an income trust in February and March 2007 and sells its units...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 53 - Subsection 53(2) - Paragraph 53(2)(h) - Subparagraph 53(2)(h)(i.1) | amount paid to beneficiary "was included" in its taxation year in which trust's taxation year ends/beneficiary return for previous year re-opened to avoid double taxation | 274 |
7 July 2006 Internal T.I. 2006-0185961I7 F - Choix en vertu de 110.6(19) - Impact sur la FNACC
As a result of the application of s. 13(7)(e)(iii) to a building for which a s. 110.6(19) election had been made, on a subsequent disposition of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 110.6 - Subsection 110.6(19) | detailed example regarding subsequent building disposition | 47 |
10 May 2001 Internal T.I. 2001-0066107 F - TABLE RONDE - QUESTION 32
A taxpayer disposes of depreciable property, having a UCC and capital cost to him of $300,000 and $400,000, respectively, to his son for a sale...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(b) | absence of cost step-up to s. 69(1)(b) transferee does not produce a capital gain on subsequent disposition due to such gain being recapture pursuant to s. 13(7)(e)(iii) | 125 |
84 C.R. - Q.51
S.39(1)(a) prevents double taxation of the parent on a subsequent disposition of depreciable property received by the parent on a s. 88(1) winding...
Subparagraph 39(1)(a)(i.1)
Cases
Canada v. Zelinski, 2000 DTC 6001 (FCA)
The taxpayers purchased numerous paintings of Morrisseau - initially because of the advantageous price and, later, in greater volume after they...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 161 - Subsection 161(1) | 108 | |
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Commodities, and commodities futures and derivatives | paintings acquired on capital account for donation | 136 |
Administrative Policy
4 November 2005 External T.I. 2005-0131741E5 F - Don par testament d'un bien culturel
2005-0131741E5 F (the “Letter”) dealt with a specific bequest of works of art to a museum by the will of Mr. X or, if his spouse survived him,...
Clause 39(1)(a)(i.1)(B)
Administrative Policy
4 February 2005 External T.I. 2004-0093611E5 F - Don par testament d'un bien culturel
A specific bequest of works of art was made to a museum by the will of Mr. X or, if his spouse survived him, to a spousal trust, with the...
Subparagraph 39(1)(a)(ii)
Administrative Policy
8 July 2013 Internal T.I. 2012-0470021I7 - Settlement of Future Benefits ASO Plan
CRA noted that an employer's group disability plan which was administered by an administrator (such as an insurance corporation) on an...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(f) | 244 |
Subparagraph 39(1)(a)(iii)
Administrative Policy
9 October 2015 APFF Financial Strategies and Instruments Roundtable Q. 1, 2015-0588941C6 F - Critical illness insurance
A corporate owner of a critical illness insurance policy (in this case, "Opco" holding a policy referencing its sole individual shareholder) could...
24 October 2006 External T.I. 2006-0174091E5 F - Disposition de parts d'un fonds réservé
In confirming that the exchange of units of a particular segregated fund with a redemption fee for units of a segregated fund without a redemption...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition - Paragraph (a) | unit for unit exchange in segregated fund was disposition | 39 |
9 May 2006 Internal T.I. 2006-0175551I7 F - Traitement fiscal d'un montant forfaitaire
A lump sum received by an individual who had been injured and in receipt of disability benefits and that corresponded to the present value of the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(f) | lump sum received in settlement of entitlement to future disability benefits was not taxable under s. 6(1)(f), as was forgiveness of obligation to repay disability overpayments | 125 |
| Tax Topics - Income Tax Act - Section 6 - Subsection 6(15) | forgiveness of rehabilitation loan was taxable | 85 |
30 November 2004 External T.I. 2004-0090181E5 F - Assurance maladie grave
A corporation purchases a critical illness insurance policy on the life of its sole shareholder and there is also, at an additional cost, a rider...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) | misallocation shareholder benefit could arise if corporation pays premiums for its critical illness policy and sole shareholder pays for rider entitling him to premium refunds | 285 |
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(h) | premiums paid by corporation for critical illness policy of which it is beneficiary are non-deductible pursuant to s. 18(1)(h) | 320 |
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Income-Producing Purpose | premiums paid by corporation for critical illness policy of which it is beneficiary are non-deductible per s. 18(1)(a) or (h) | 173 |
Paragraph 39(1)(b)
Administrative Policy
8 October 2010 CTF Roundtable, 2013-0507191C6 - Monetization of Securities - 2010 CTF Conference
2007-0246461R3 concerned a monetization contract (the "Term Contract") of Holdco A and Holdco X with a Canadian financial institution (“FI”)...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Futures/Forwards/Hedges | equity forward gain on income account | 122 |
7 October 2016 APFF Roundtable Q. 3, 2016-0652851C6 F - Annulation d'une promesse d'achat sur une maison
As a result of breach to sell a personal residence, an individual receives $50,000 in damages from the defaulted purchaser. If the purchaser had...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(2) - Paragraph 40(2)(b) | damages for breach of covenant to purchase principal residence not covered | 71 |
IT-159R3 "Capital Debts Established to be Bad Debts"
Where a debt is established to have become a bad debt, any resulting capital loss will be reduced under s. 39(1)(b) by the amount of any deduction...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 50 - Subsection 50(1) | 0 |
Subparagraph 39(1)(b)(i)
Administrative Policy
8 November 2006 External T.I. 2006-0176171E5 F - Revente d'un bien amortissable - alinéa 13(7)e)
Corporation A sold a building with a cost of $3,800,000 to an associated corporation (Corporation B) for its FMV of $4,200,000, so that s....
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(7) - Paragraph 13(7)(e) | no deemed CCA class for s. 13(7)(e) denial | 96 |
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Undepreciated Capital Cost - F | application of disposition expenses under Element F | 141 |
Paragraph 39(1)(c)
Cases
Ollenberger v. Canada, 2013 DTC 5064 [at 5863], 2013 FCA 74
The taxpayer was entitled to recognize a business investment loss on a loan owing to him by a Canadian-controlled private corporation ("AES")...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Active Business | 116 | |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Small Business Corporation | active business included passive business | 116 |
Rich v. Canada, 2003 DTC 5115, 2003 FCA 38
In finding that the taxpayer was entitled to realize a business investment loss on a loan made by him to a company of which he was a minority...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(2) - Paragraph 40(2)(g) - Subparagraph 40(2)(g)(ii) | subordinate income-producing purpose sufficient | 122 |
| Tax Topics - Statutory Interpretation - Business Judgment | 68 | |
| Tax Topics - General Concepts - Purpose/Intention | subordinate purpose sufficient | 45 |
Reeson Investments Ltd. v. The Queen, 90 DTC 6420, [1990] 2 CTC 190 (FCTD)
The taxpayer acquired shares from another CCPC ("Quasar") within the same corporate group. Although the shares had an ACB to Quasar of $7,385,255,...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Statutory Interpretation - Drafting Style | 59 |
See Also
Moose Factory Restaurant Properties Ltd. v. The Queen, 2019 TCC 156
The taxpayer was designated as a joint borrower with an arm’s length company (“1207330,” that was a restaurant franchisee) for a secured...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(11) - Investment Contract | debt is obligation to pay a sum certain or amount reducible to sum certain | 195 |
Hébert v. The Queen, 2018 CCI 48
The market for the business of the taxpayer’s corporation (“Radio Progressive “) of selling and repairing radio telecommunication equipment...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Small Business Corporation | corp qualified as SBC where only business activity was unsuccessful efforts to sell its stock of equipment | 362 |
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Start-Up and Liquidation Costs | attempted sale of assets previously used in an active business represented the continued carrying on of that business | 83 |
Barnwell v. The Queen, 2015 DTC 1115 [at 724], 2015 TCC 98 (Informal Procedure), aff'd 2016 FCA 150
The taxpayer made various loans to an individual ("Austin"), who was the sole director and shareholder of a business corporation ("Whitesand"), in...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Corporate/Separate Personality - separate existence | separate personality of Ontario corporation | 95 |
Nanica Holdings Limited v. The Queen, 2015 DTC 1111 [at 657], 2015 TCC 85 (Informal Procedure)
The taxpayer was a Canadian controlled private company which paid taxable dividends to its shareholders in 2007 and 2008. However, it failed to...
| Other locations for this summary | |
|---|---|
| Tax Topics - Income Tax Act - Section 129 - Subsection 129(1) | “Dividend refund” an amount actually paid, not a notional amount. |
Gaumond v. The Queen, 2014 DTC 1024 [at 98], 2014 TCC 339 (Informal Procedure)
The Canadian-controlled private corporation ("GMG") of which the taxpayer was the principal shareholder made a proposal in May 2011 under the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 50 - Subsection 50(1) | s. 50 not available where debt settled in year | 108 |
| Tax Topics - Income Tax Act - Section 84 - Subsection 84(9) | s. 84(9) not for greater certainty | 137 |
St-Hilaire v. The Queen, 2014 TCC 336 (Informal Procedure)
The taxpayer made non-interest bearing advances to a wholly-owned incorporated radio station. On 8 August 2008, the corporation made a proposal...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 50 - Subsection 50(1) | acceptance of bankruptcy proposal caused debt to disappear before taxpayer's year end | 226 |
Langille v. The Queen, 2009 DTC 1103 [at 564], 2009 TCC 139
The taxpayer who was the sole director and officer of a corporation ("Alland") owned by him and a family trust, lent money in order for Alland to...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125 - Subsection 125(7) - Specified Investment Business | unwitting pyramid scheme | 139 |
Borys v. The Queen, 2005 DTC 1069, 2005 TCC 397
Before going on to find that the taxpayer had provided evidence that amounted to a prima facie case that a loss realized by it on a debt owing to...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Onus | 61 | |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Small Business Corporation | 112 |
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...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(2) - Paragraph 40(2)(g) - Subparagraph 40(2)(g)(ii) | 88 |
Klein v. The Queen, 2001 DTC 443 (TCC)
A loan that the taxpayer made to a partnership consisting of two Canadian-controlled private corporations qualified for recognition as a business...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Small Business Corporation | 80 | |
| Tax Topics - Income Tax Act - Section 96 - Subsection 96(1) - Paragraph 96(1)(f) | debt of common law partnership is owed by its partners | 118 |
Sandner v. MNR, 93 DTC 901, [1993] 2 CTC 2193 (TCC)
The taxpayers did not realize allowable business investment losses pursuant to their guarantees of obligations of a corporation where in the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition | 83 |
Kyrés v. MNR, 92 DTC 1958, [1992] 2 CTC 2214 (TCC)
Interest on loans made by the taxpayer that accrued after the bankruptcy of the recipient corporations, and that was not deductible under s....
McHale v. MNR, 92 DTC 1781, [1992] 2 CTC 2105 (TCC)
Because the taxpayer did not make any payment under a guarantee of debt of his company which was called in the taxation year in question, no debt...
Administrative Policy
13 April 2023 External T.I. 2017-0684341E5 F - Perte au titre d’un placement d’entreprise
An individual was the sole shareholder, and held an interest-bearing debt (the "Debt" – acquired for an income-producing purpose), of a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Small Business Corporation | a corporation may continue to qualify as an SBC well after it has in fact ceased to transact its business | 209 |
| Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) | sale of debt for $1 in order to trigger a loss might be a NAL transaction | 150 |
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Income-Producing Purpose | business does not cease until the prior commitments incurred in the course of the business are fulfilled | 136 |
16 June 2016 Internal T.I. 2015-0597971I7 F - Perte réputée nulle - loss deemed nil
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(2) - Paragraph 40(2)(g) - Subparagraph 40(2)(g)(ii) | capital loss potentially could be recognized on a non-interest bearing loan made to a corporation in which the taxpayer had no equity/subordinate purpose sufficient | 269 |
2 October 2014 External T.I. 2013-0513281E5 F - Interaction entre 42(1) et 39(1)c)
As a result of the amendment to s. 42 effective for taxation years ending after 4 November 2010, a s. 42(1)(b)(ii) payment (if made after the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 42 | no deeming of s. 42(1)(b)(ii) loss to arise from the SBC shares, so that not a BIL | 271 |
15 September 1995 External T.I. 9514515 - WHETHER AN ABIL CAN BE CLAIMED AS A CAPITAL LOSS.
"Where a taxpayer's loss qualifies as a BIL under paragraph 39(1)(c) of the Act, it must be claimed as such and not as a capital loss, since...
23 August 1994 External T.I. 9413755 - ABIL
Where a taxpayer's loss qualifies as a business investment loss, it must be claimed as such and not as a capital loss.
29 July 1992 Memorandum (Tax Window, No. 21, p. 4, ¶2040)
A loss on the disposition of a debt may be a business investment loss if the debtor and creditor are dealing at arm's length at the time of...
14 April 1993 T.I. (Tax Window, No. 30, p. 6, ¶2491)
Re whether s. 39(1)(c) does not require the corporation to be a small business corporation when a debt is incurred, but only when there is a...
91 C.R. - Q.35
The arm's length determination is made at the point at which there is a disposition of the debt giving rise to the application of s. 39(1)(c).
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(2) - Paragraph 40(2)(g) - Subparagraph 40(2)(g)(ii) | 64 |
19 February 1990 T.I. (July 1990 Access Letter, ¶1319)
Discussion of the phrase "was at any time in the twelve months preceding that time a small business corporation".
86 C.R. - Q.24
ABIL's re non-interest bearing loans.
81 C.R. - Q.20
Although the redemption by a CCPC of shares held by an arm's length shareholder gives rise to an ABIL, the dissolution does not because there has...
80 C.R. - Q.18
A disposition of shares in the course of either a redemption or purchase for cancellation is a disposition "to" a corporation for purposes of s....
IT-484R "Business Investment Losses"
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 84 - Subsection 84(9) | 0 | |
| Tax Topics - Income Tax Act - Section 164 - Subsection 164(6) | 48 |
Subparagraph 39(1)(c)(ii)
Cases
Keybrand Foods Inc. v. The Queen, 2019 TCC 161, aff'd 2020 FCA 201
The taxpayer and its parent (BWS) were guarantors of loans to an unrelated corporation (Vidabode) which had defaulted on loans from GE Capital....
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) | taxpayer had de facto control of investee through terms of its parent's shareholders agreement re the board of the investee | 325 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(i) | interest was deductible on money borrowed to be lent at interest to company in default cf. money borrowed to acquire its shares when its collapse was imminent | 346 |
Administrative Policy
17 November 2005 External T.I. 2005-0118101E5 F - Disposition réputée
In finding that a capital loss arising under to s. 128.1(4)(b) could not be a business investment loss (BIL), CRA stated:
Taking into account the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 128.1 - Subsection 128.1(4) - Paragraph 128.1(4)(b) | deemed disposition is not to an arm’s length person, so that no business investment loss can result | 114 |
21 November 2001 Internal T.I. 2001-0094527 F - PERTE REPUTEE NULLE-BRYAN
The discharge pursuant to a bankruptcy proposal of unsecured debt owing by a small business corporation o its shareholder for cents on the dollar...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(2) - Paragraph 40(2)(g) - Subparagraph 40(2)(g)(ii) | Byram now followed re loss on non-interest-bearing shareholder loan to corporation | 57 |
| Tax Topics - Income Tax Act - Section 50 - Subsection 50(1) - Paragraph 50(1)(a) | no partial bad debt recognition under s. 50(1)(a) | 64 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(27) | s. 248(27) does not permit partial debt write-off under s. 50(1)(a) | 75 |
| Tax Topics - Income Tax Act - Section 251 - Subsection 251(2) - Paragraph 251(2)(b) - Subparagraph 251(2)(b)(i) | shareholder continued to control “his” corporation while it was being administered by a bankruptcy trustee pending approval of a proposal | 83 |
| Tax Topics - Income Tax Act - Section 116 - Subsection 116(5) | settlement under bankruptcy proposal of debt did not entail a disposition of that debt to the corporation | 50 |
Subparagraph 39(1)(c)(iii)
Administrative Policy
12 December 2002 External T.I. 2002-0146175 F - Losses Incurred by a Taxpayer ect......
A farmer holding shares of the cooperative corporation when it became bankrupt would be able to elect under s. 50(1)(b)(i) to be deemed to have...
Subparagraph 39(1)(c)(iv)
See Also
Dias v. The Queen, 2021 TCC 85
The taxpayers (Mr. and Ms. Dias), who started up a retail fashion and furniture business in two small business corporations owned by them on a...
Administrative Policy
9 February 2012 Internal T.I. 2011-0426871I7 F - Perte au titre d'un placement d'entreprise
In 2002, the taxpayer made a loan to a wholly-owned corporation, which used those funds to make a foreign investment, causing it to cease to be a...
9 June 2005 Internal T.I. 2005-0122511I7 F - Créance irrécouvrable dans une OSBL
In finding that an interest-bearing loan made by a director of a not-for-profit organization to the NPO that became a bad debt when the NPO became...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(2) - Paragraph 40(2)(g) - Subparagraph 40(2)(g)(ii) | a debt obligation bearing a reasonable rate of interest satisfies s. 40(2)(g)(ii) | 89 |
Subsection 39(1.1)
Administrative Policy
27 October 2023 Internal T.I. 2020-0868031I7 - Disposition of Foreign Currency
Regarding whether s. 39(1.1) did not extend (as indicated in 2017-0712621C6 F) to dispositions of foreign currencies held on deposit at a...
7 October 2022 APFF Financial Strategies and Instruments Roundtable Q. 3, 2022-0943261C6 F - Average Exchange Rate
CRA indicated that it will "generally accept an individual’s use of an average exchange rate to compute capital gains and losses pursuant to...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 261 - Subsection 261(1) - Relevant Spot Rate | circumscribed acceptance of using average exchange rates | 257 |
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(1) - Paragraph 40(1)(a) - Subparagraph 40(1)(a)(i) | use of average exchange rates for capital property dispositions not generally accommodated | 120 |
6 October 2017 APFF Financial Strategies and Instruments Roundtable Q. 8, 2017-0712621C6 F - Dépôt en monnaie étrangère-Immobilisation
Is a sum of money in a foreign currency, on deposit by an individual at a financial institution, a “capital property” and subject to s. 39(1)...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 70 - Subsection 70(5) | FX deposit treated as debt rather than s. 39(1.1) currency | 52 |
Subsection 39(2) - Foreign exchange capital gains and losses
Cases
Canadian Imperial Bank of Commerce v. Canada, 2023 FCA 91
CIBC realized an FX loss of C$126.4 million in 2007 when shares of a US subsidiary for which it had subscribed US$1 billion approximately 11...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.6) | s. 40(3.6) applied to deny an FX loss arising on shares | 352 |
| Tax Topics - Statutory Interpretation - Double Taxation/Deduction (Presumption Against) | no intention to create 2 capital losses out of 1 | 80 |
| Tax Topics - Statutory Interpretation - Interpretation/Definition Provisions | deeming provision altered reality | 131 |
Canada v. Bank of Montreal, 2020 FCA 82
BMO used a tower structure for a U.S.$1.4 billion financing of its U.S. subsidiaries in which a subsidiary Nevada LP of BMO applied third-party...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 112 - Subsection 112(3.1) | s. 39(2) deeming of loss to be from FX rather than shares applied to s. 112(3.1) | 463 |
| Tax Topics - Statutory Interpretation - Interpretation/Definition Provisions | deeming provision applied to all provisions of the Act where it was not explicitly limited | 396 |
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(1) - Tax Benefit | no tax benefit as structuring was unnecessary | 144 |
Canada v. Agnico-Eagle Mines Limited, 2016 FCA 130
In 2002, the taxpayer issued US-dollar denominated debentures which were convertible at the holders' option into common shares at a conversion...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 261 - Subsection 261(2) | on conversion of USD convertible debenture, the repayment amount arose at the conversion time | 162 |
Macmillan Bloedel Ltd. v. R., 99 DTC 5454, [1999] 3 CTC 652 (FCA)
The taxpayer redeemed U.S.-dollar denominated preferred shares at a time that the U.S. dollar had appreciated relative to the exchange rate at the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 84 - Subsection 84(3) | 58 |
Tahsis Co. Ltd. v. The Queen, 79 DTC 5328, [1979] CTC 410 (FCTD)
The only fluctuations in exchange rates to be taken into account under s. 39(2) are those occurring subsequent to 1971. Thus, where U.S. dollars...
See Also
Canadian Imperial Bank of Commerce v. The Queen, 2021 TCC 71, aff'd 2023 FCA 91
CIBC realized an FX loss of C$126.4 million in 2007 when shares of a US subsidiary for which it had subscribed US$1 billion were redeemed for US$1...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.6) | FX loss on share redemption arose under s. 40(1) and, therefore, was subject to s. 40(3.6) denial | 344 |
| 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 |
The Bank of Montreal v. The Queen, 2018 TCC 187, aff'd 2020 FCA 82
The taxpayer (“BMO”) lent U.S.$1.4 billion to a number of its U.S. subsidiaries (the “Harris Group”) using a tower structure. Most of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(1) - Tax Benefit | no tax benefit because transaction did not come within subject matter of the "avoided" stop-loss rule | 279 |
Agnico-Eagle Mines Limited v. The Queen, 2015 DTC 1008 [at 43], 2014 TCC 324, aff'd 2016 FCA 130
In 2002, the taxpayer ("Agnico") issued US-dollar denominated debentures which were convertible at the holders' option into common shares at a...
| Other locations for this summary | |
|---|---|
| Tax Topics - Income Tax Act - Section 261 - Subsection 261(2) | U.S. dollar principal of a convertible debenture should be considered on conversion to have been settled at the historical exchange rate when the conversion price was set |
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Evidence | expert opinion on domestic law excluded | 33 |
Imperial Oil Limited v. The Queen, 2004 DTC 2377, 2004 TCC 207, aff'd on different grounds 2004 DTC 6044, 2004 FCA 36
The taxpayer issued U.S. dollar debentures in 1989 at a discount of 1.199% at which time the U.S. dollar had a value of Cdn.$1.1766 and redeemed a...
Federal Commissioner of Taxation v. Energy Resources of Australia Ltd., 94 ATC 4923, [1994] FCA 924 (Full Fed. Ct.)
In order to refinance U.S.-dollar loans that it had received to finance the development of its mine, the Australian taxpayer negotiated a new...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Foreign Exchange | short-term note facility on capital account | 210 |
| Tax Topics - Income Tax Act - Section 9 - Computation of Profit | 142 |
Reed v. Young, [1984] BTC 424 (C.A.), aff'd [1986] BTC 242 (HL)
"The word 'sustains' ... means no more than 'incurs' or 'suffers'." A trading "loss is only sustained because debts and liabilities have been...
The Minister of National Revenue v. Consolidated Glass Limited, 57 DTC 1041, [1957] CTC 78, [1957] S.C.R. 167
In computing its undistributed income on hand at the end of its 1949 taxation year, the taxpayer was entitled to deduct "all capital losses...
Administrative Policy
16 May 2018 IFA Roundtable Q. 7, 2018-0750261C6
Canco has an unrealized foreign exchange gain on the USD loan (the “Loan”) owing to it by its wholly–owned subsidiary (Canco 1), and Canco 1...
29 November 2016 CTF Roundtable Q. 3, 2016-0670201C6 - Agnico-Eagle Mines Decision
The Agnico-Eagle methodology would appear to potentially result in an issuer of U.S.-dollar debentures (where the underlying shares have...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 143.3 - Subsection 143.3(3) - Paragraph 143.3(3)(b) | application to coversion of debenture | 117 |
22 January 2015 Internal T.I. 2014-0560571I7 - Paid-up capital reduction of a foreign affiliate
Canco, which reports its Canadian tax results in Canadian dollars, invested US$200M in common shares of its wholly-owned non-resident subsidiary...
2014 Ruling 2013-0479701R3 - Transfer of US dollar loan
Ruling that s. 39(2) would not apply to the amendment (without novation) of a non-interest-bearing demand U.S-dollar loan to make it...
| Locations of other summaries | Wordcount | |
|---|---|---|
| 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 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 |
2014 Ruling 2013-0514191R3 - Debt restructuring, forgiveness and winding-up
underline;">: Currrent structure. Canco1 is obligated to its affiliate (Canco3) under non-interest-bearing U.S.-dollar debt evidenced by demand...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Principal Amount | non-application of s. 39(2) to exchange of U.S.-dollar notes | 142 |
| Tax Topics - Income Tax Act - Section 51.1 | s. 51.1 exchange of U.S.-dollar notes | 142 |
| Tax Topics - Income Tax Act - Section 53 - Subsection 53(1) - Paragraph 53(1)(f.1) | 0 | |
| Tax Topics - Income Tax Act - Section 80.01 - Subsection 80.01(4) | s. 51.1 exchange of U.S.-dollar notes and ATR-66 debt slide | 430 |
14 March 2014 Internal T.I. 2013-0507661I7 - Foreign Exchange - Loan Renewal
A U.S.-dollar borrowing of a subsidiary of the Ultimate Parent from a related company was not repaid when it matured but the loan instead was...
5 November 2013 External T.I. 2013-0501241E5 F - Application of subsection 39(2)
Respecting whether s. 39(2) applied on the payment of a previously declared dividend, CRA stated (TaxInterpretations translation):
A dividend, at...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(11) - Investment Contract | dividend becomes debt when declared | 24 |
2011 Ruling 2011-0395771R3 - 39(2) - Conversion of P/S to C/S
US-dollar denominated preferred shares of a Canadian corporation held by its non-resident parent are amended to add a conversion right, so that...
27 June 2011 External T.I. 2009-0350501E5 F - Gains et pertes sur change étranger
A Canadian corporation acquires capital property at a cost of U.S.$90,000 and pays the purchase price 30 days later after the exchange rate has...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 89 - Subsection 89(1) - Capital Dividend Account - Paragraph (a) | s. 39(2) gain or loss does not affect CDA until year end | 119 |
16 November 2009 External T.I. 2009-0317591E5 - FX gains/losses when partners assume ptnshp debt
Is a foreign exchange gain or loss recognized where a Canadian partnership is dissolved in accordance with s. 98(3) and, as part of the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 98 - Subsection 98(3) | assumption of FX debt on s. 98(3) wind-up | 35 |
5 October 2007 APFF Roundtable, 2007-0242441C6 F - Gains ou pertes sur taux de change
...in respect of a gain or loss resulting from the disposition of a property that is a capital property...subsection 39(2) of the ITA will apply...
29 August 2007 Internal T.I. 2007-0219931I7 F - Perte sur taux de change - société de personnes
Canco and a US resident who each held a 50% interest in a US partnership each advanced US$1 million to the partnership and then converted those...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 53 - Subsection 53(2) - Paragraph 53(2)(c) - Subparagraph 53(2)(c)(i) | no basis increase where partner converts its USD advance with accrued FX gain into additional units | 141 |
28 August 2007 External T.I. 2006-0190971E5 F - Gain et perte sur change étranger
A taxpayer who trades in U.S. securities on income account maintains a Canadian dollar and U.S. dollar account with an investment dealer and, when...
23 July 2007 Internal T.I. 2007-0234691I7 F - Foreign Exchange Gains/Losses and CDA
S. 39(2) applies only if the gain or loss is solely attributable to the fluctuation of currency. Accordingly, if the gain or loss is not solely...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 89 - Subsection 89(1) - Capital Dividend Account - Paragraph (a) - Subparagraph (a)(ii) | s. 39(2) capital losses not deducted until year end | 33 |
23 July 2007 Internal T.I. 2007-0228601I7 F - Redemption of U.S. Denominated Shares
Where US-dollar denominated preferred shares in a wholly-owned subsidiary are redeemed through the issuance of Canadian-dollar denominated...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 84 - Subsection 84(3) | MacMillan Bloedel distinguished where redemption for preferred shares rather than cash | 170 |
15 January 2007 Internal T.I. 2006-0216801I7 - Redemption of US $ Denominated Shares
The redemption of U.S.-dollar denominated preferred shares of the taxpayer gave rise to a capital loss under s. 39(2). However, the Directorate...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 84 - Subsection 84(3) | MacMillan Bloedel to be followed | 40 |
8 September 2005 External T.I. 2004-0085081E5 - Conversion of a foreign currency denominated debt
Where the holders of US-dollar denominated convertible debentures of a Canadian public corporaton ("Pubco") convert their debentures into common...
8 November 2004 External T.I. 2004-0067161E5 F - Change étranger
An investments corporation, which has a bank account in the U.S. that is used in its 2003 year to fund the purchase of shares of U.S....
8 September 2003 Internal T.I. 2003-0010407 F - Gains et pertes sur change étranger
After stating that, based on Gaynor, “subsection 39(2) refers to capital gains or losses that are solely attributable to the gain or loss...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(1) - Paragraph 40(1)(a) - Subparagraph 40(1)(a)(i) | Gaynor applies in computing gain on disposition of US securities | 82 |
9 May 2002 Internal T.I. 2002-0135307 F - Application du paragraphe 39(2)
The Directorate found that s. 39(2) did not apply to a cash distribution made by a Delaware subsidiary of the taxpayer out of that subsidiary’s...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 90 - Subsection 90(3) | distribution of contributed surplus by Delaware subsidiary likely was a dividend | 61 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Dividend | a dividend is any corporate distribution other than of PUC | 99 |
4 January 2001 External T.I. 2000-0044425 - Foreign currency denominated shares
The CCRA accepts the reasoning in the MacMillan Bloedel decision. "It is not clear whether the reasoning can be applied to a purchase of shares...
19 November 1999 Internal T.I. 1999-0010360 - The Queen v. MacMillan Bloedel Ltd.
Does CCRA accept MacMillan (where a s. 39(2) capital loss was recognized on the redemption of the preferred shares)? CCRA responded:
We accept...
23 January 1998 External T.I. 9721495 - GERMAN CURRENCY REPLACED BY EURO DOLLAR (39(2))
Where a loan payable by a Canadian corporation to its foreign parent is changed from Deutschemarks into Euros, there will not be a realization of...
Income Tax Technical News No. 14, 9 December 1998
As a result of the review, it is now our position that if a debt obligation is renegotiated otherwise than as provided for in its original terms,...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 9 - Timing | 37 | |
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) | journal entry not crediting | 114 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition | 0 |
28 February 1996 External T.I. 9601795 - FOREIGN EXCHANGE LOSS
Where a debt denominated in U.S. dollars was replaced by a new debt obligation denominated in Canadian dollars whose amount was equivalent to the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 80 - Subsection 80(2) - Paragraph 80(2)(h) | 49 | |
| Tax Topics - Income Tax Act - Section 80 - Subsection 80(2) - Paragraph 80(2)(k) | 49 |
4 June 1993 External T.I. 5-931384
A partnership realized capital losses under s. 39(2) on the repayment of U.S.-dollar denominated debt, with those losses being allocated to its...
7 July 1992 External T.I. 5-9215705
The partnership accounts for a partnership between two Canadian residents (X and y) are denominated in U.S. dollars. X contributes U.S.$10...
17 January 1991 T.I. (Tax Window, Prelim. No. 3, p. 2, ¶1094)
Accrued foreign exchange gains or losses on foreign currency deposits will not be considered to have been made or sustained until the funds are...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 95 - Subsection 95(1) - Foreign Accrual Property Income | 71 |
3 October 1990 T.I. (Tax Window, Prelim. No. 1, p. 3, ¶1025)
Where there is a reduction in the U.S. dollar par value of the shares of a U.S. corporation through a distribution of U.S. dollars to the Canadian...
90 C.R. - Q51
The same criteria as set out in IT-448 apply to the question of whether a foreign currency obligation has changed sufficiently to trigger a...
79 C.R. - Q.35
Where funds of a particular currency are moved from one form of deposit to another (e.g., the rollover of term deposits and GIC's) no gain or loss...
IT-270R2 "Foreign Tax Credit" under "Addition to Taxable Income"
Discussion of application of s. 39(2) to late payments or overpayments of foreign taxes.
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...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(1) | 33 |
IT95R "Foreign Exchange Gains and Losses" 1 January 1995.
13. ...Foreign currency funds on deposit are not considered to be disposed of until they are converted into another currency or are used to...
Articles
Jim Samuel, Byron Beswick, "Selected Issues in Transactions Involving Debt", 2019 Conference Report (Canadian Tax Foundation), 18:1 – 27
Whether specific tracing or blended aggregate approach should be applied in determining s. 39(2) gain or loss on FX debt partial repayments (p....
Didier Fréchette, Ryan Rabinovitch, "Current Issues Involving Foreign Exchange", 2015 CTF Annual Conference paper
Dealing with FX gain on U.S. dollar loan by Can LP to Cansub to fund on-loan to US Opco: asymmetrical application where s. 51 applies (pp. 26:...
Carrie Smit, "Debt Restructuring and the Falling Canadian Dollar"
If a Canadian corporate debtor, which borrowed US$100 at par, restructures its debt, at a time that the US dollar is now worth Cdn.$1.50, by...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 80 - Subsection 80(2) - Paragraph 80(2)(k) | 324 |
Amélie Guimont, "Denial of Capital Losses from Foreign Currency Fluctuations", Canadian Tax Focus, Vol. 3, No. 2, May 2013, p.4.
... New subsection 39(2) does not apply to any capital gain or capital loss to which subsection 39(1) applies. ...Therefore, subsection 39(2)...
Eric Bretson, Heather Kerr, "Tax Planning for Foreign Currency", 2009 Conference Report: discussion of relationship between ss. 39(1) and (2).
K. A. Siobhan Monaghan, Raj Juneja, "Selected Issues in Cross-Border Debt Financing", 2006 Conference Report, c. 16: includes discussion of foreign exchange issue on tower structures.
H. Berwick, E. Richardson, "Conversion to the Euro-Taxable Event?", Corporate Finance, Vol. VI, No. 2, p. 500.
Subsection 39(2.02)
Articles
Carrie Aiken, Johnson Tai, "Debt Restructuring Transactions – Issues, Strategies and Trends", 2016 CTF Annual Conference draft paper
Background to s. 39(2.01) (pp. 13-14
Many Canadian companies have or had significant accrued foreign currency gains in their US dollar denominated...
Subsection 39(2.1) - Upstream loans — transitional set-off
Administrative Policy
28 May 2015 IFA Roundtable Q. 8, 2015-0581561C6 - IFA 2015 Q.8: 39(2.1) and FCTR
A corporation resident in Canada (the "borrowing party"), which elected for the U.S. dollar as its functional currency election starting in 2014...
Articles
Geoffrey S. Turner, "Transitional Tax Treatment of Grandfathered Upstream Loans – Repayment Deadline Approaching", International Tax (Wolters Kluwer CCH), No. 88, June 2016, p. 7
Purpose of eliminating FAPI whipsaw mismatch (e.g., where US dollar upstream loan) due to sub’s taxable capital gain or allowable capital loss...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 90 - Subsection 90(9) | 362 | |
| Tax Topics - Income Tax Act - Section 90 - Subsection 90(8) - Paragraph 90(8)(a) | 96 |
Subsection 39(3) - Gain in respect of purchase of bonds, etc., by issuer
Administrative Policy
2014 November 18 TEI Roundtable, Q. E.3
Would s. 39(3) apply to the following repurchases by a public company of its bonds?
- A public offer to repurchase a predetermined number at a...
20 April 2009 Internal T.I. 2008-0302511I7 - LYONS - Open Market Purchase
On an open market purchase of liquid yield option notes ("Lyons"), s. 80 will not apply on the repurchase if s. 39(3) so applies (i.e., there is a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 80 - Subsection 80(1) - Forgiven Amount | s. 80 does not apply to open market purchases | 199 |
Articles
Carrie Smit, "Repurchasing Underwater US Dollar Notes", International Tax (Wolters Kluwer), August 2015, No. 83.
Separate forgiven amount and s. 39(2) loss on note tender offer repurchase
[C]onsider notes with a principal amount (and issuance price) of US$...
Hugh Berwick, Derek Chiasson, "Repayment or Repurchase of Debt", Corporate Finance, Vol. VI, No. 1, 1998, p. 457: Discussion of whether s. 18(9.1) or 20(1)(f) applies to open market purchases of foreign currency bonds.
Subsection 39(4) - Election concerning disposition of Canadian securities
Cases
Rezek v. Canada, 2005 DTC 5373, 2005 FCA 227
After confirming the Minister's position that the taxpayer and his wife were engaged in spread transactions as a partnership, and therefore that...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 150 - Subsection 150(1) - Paragraph 150(1)(d) | s. 39(4) elections that were made with late-filed returns were valid as being made "in the taxpayer's return" | 146 |
| Tax Topics - Income Tax Act - Section 171 - Subsection 171(1) | impermissible new theory | 45 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Property | spread comprising a convertible security and rights under short sale was not a single property | 129 |
| Tax Topics - Income Tax Act - Section 96 | spouse carrying on linked legs of integrated trading transactions | 204 |
| Tax Topics - Statutory Interpretation - Resolving Ambiguity | 54 |
Satinder v. Canada (Attorney General), 2003 DTC 5022, 2002 FCA 491
The filing of elections under s. 39(4) by the appellants had no effect on interest that had accrued on bonds that were redeemed by the appellants....
Satinder v. The Queen, 95 DTC 5340 (FCA)
The difference between the $152,078 purchase price for a Government of Canada Treasury Bill, which the taxpayer acquired on May 2, 1989, and its...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(c) | T-Bill discounts were interest | 133 |
The Queen v. Loewen, 93 DTC 5109, [1993] 1 CTC 212 (FCTD)
In finding that a purported election made by the taxpayer only after an audit by Revenue Canada was invalid, Dubé J. stated (p. 5115):
"... The...
See Also
Sandnes v. The Queen, 2004 DTC 2466, 2004 TCC 244
Before going on to find that the taxpayer's transaction in shares of a public company were on capital account rather than adventures in the nature...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Shares | 147 |
Robertson v. The Queen, 97 DTC 449, [1996] 2 CTC 2269 (TCC)
The taxpayer was found not to have made a valid election under s. 39(4) given that the election form filed with its return was incomplete, and the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Loss v. Loss | 36 | |
| Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) | deputy chairman and director of public company dealt at arm's length with it | 70 |
| Tax Topics - Statutory Interpretation - Interpretation Act - Section 32 | s. 32 deals with departures from form rather than content | 43 |
Taylor v. MNR, 90 DTC 1917, [1990] 2 CTC 2466 (TCC)
The Minister was not compelled to accept an s. 39(4) election in an amended return which the taxpayer filed four years after the taxation year in...
Financial Collection Agencies (Quebec) Ltd. v. MNR, 90 DTC 1040, [1990] 1 CTC 2178 (TCC)
Before finding a late election under s. 39(4) to be ineffective, Rip J. stated (p. 1049):
"Just because it may be obvious from the return of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Debt/ receivables | 79 |
Administrative Policy
7 October 2021 APFF Financial Strategies and Instruments Roundtable Q. 7, 2021-0899681C6 F - Stock option, Short sale and Identical property
An employee, who engages in a short sale transaction to finance the exercise of stock options on the shares of the individual’s employer, short...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 7 - Subsection 7(1.31) | s. 7(1.31) applies to sale of shares acquired on exercise to cover short, but not to the sale of the shorted shares | 201 |
18 September 2013 Internal T.I. 2013-0487871I7 - Filing Due Date for Elections
Regarding elections that are required to be filed with the taxpayer's return, CRA noted that Rezek established that "where an election is required...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 220 - Subsection 220(3.1) | election filed with late return | 233 |
13 September 2006 External T.I. 2006-0198391E5 F - Ventes à découvert - choix 39(4)
Can a taxpayer who is eligible to make an election under s. 39(4) can make that elect on public corporation shares sold short? CRA...
24 May 2001 External T.I. 2001-0069045 - SHORT SALE AND IDENTICAL PROPERTIES
Where a taxpayer has entered into a short sale to hedge identical shares held on capital account, would the shares acquired for re-delivery to the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 47 - Subsection 47(1) | 161 | |
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Short Sales | 161 |
9 September 1999 External T.I. 9914395 - HEDGE TRANSACTION
Mr. Z short sells shares of ABC Co. and at the same time acquires convertible debentures of ABC Co. 60 days later, he purchase ABC Co. shares at...
Subsection 39(4.1) - Members of partnerships
Administrative Policy
20 June 2016 External T.I. 2014-0559961E5 F - Subsection 39(4) - securities owned by partnership
A hedge fund LP fund invests most of its assets in highly speculative securities. Can (passive) limited partners still make elections under s....
12 February 2003 External T.I. 2002-0141425 - TIERED PARTNERSHIPS
A s. 39(4) election made by a member of a second-tier partnership would not apply to Canadian securities disposed of by the first-tier partnership.
Subsection 39(5) - Exception
Administrative Policy
31 January 1995 External T.I. 9425695 - VENTURE CAPITAL CORPORATION
"It is likely that we would consider a venture capital corporation to be a 'trader or dealer in securities', within the meaning of paragraph...
Paragraph 39(5)(a)
Cases
Kane v. The Queen, 94 DTC 6671, [1995] 1 CTC 1 (FCTD)
The taxpayer was not able to rely on an election under s. 39(4) in unsuccessfully seeking to establish that gains realized by him on the...
The Queen v. Vancouver Art Metal Works Ltd., 93 DTC 5116, [1993] 1 CTC 346 (FCA)
In rejecting the taxpayer's submission that s. 39(5)(a) should be limited to persons who are registered or licensed by regulatory authorities to...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Statutory Interpretation - Expressio Unius est Exclusio Alterius | restriction applied to only one case implies not applicable elsewhere | 106 |
| Tax Topics - Statutory Interpretation - Legislative History | 87 | |
| Tax Topics - Statutory Interpretation - Noscitur a Sociis | 66 |
See Also
Investissement Boeckh Inc. v. Agence du revenu du Québec, 2023 QCCA 633
The ARQ reassessed the taxpayer (“Boeckh”) for its 2007 to 2015 taxation years, on the basis that net gains realized in those years were...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Statutory Interpretation - Provincial Law | presumption of coherence in interpreting similar federal and provincial provisions | 126 |
Investissement Boeckh Inc. v. Agence du revenu du Québec, 2021 QCCQ 12340
The ARQ reassessed the taxpayer (“Boeckh”) for its 2007 to 2015 taxation years, on the basis that net gains realized in those years were...
Zsebok v. The Queen, 2012 DTC 1127 [at 3145], 2012 TCC 99
Applying the Kane decision, Sheridan J. agreed with the Minister that the taxpayer, having no "particular or specialized knowledge of the market...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Loss v. Loss | leveraged frequent stock trading | 125 |
Administrative Policy
24 March 2015 External T.I. 2012-0470991E5 F - Mutual fund trust
Would a s. 39(4) election apply even if a mutual fund trust was a "day trader" that used margin? CRA stated (TaxInterpretations...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(21) | flow-through to unitholder of capital gain designated by MFT | 183 |
| Tax Topics - Income Tax Act - Section 132 - Subsection 132(6) | day trading included in investment undertaking | 62 |
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Income-Producing Purpose | s. 39(4) presumption establishing expense non-deductibility | 64 |
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Shares | capital v. income character determined at trust level | 94 |
6 October 2010 External T.I. 2010-0381231E5 - Extensive Trading in Securities
A "trader or dealer in securities" includes not only brokers or professionals who are registered or licensed professionally, but also includes...
15 September 1994 External T.I. 9418185 - TRADER OR DEALER - VENTURE CAPITAL CORPORATIONS
It is very likely that a venture capital corporation will be a trader or dealer in securities because it will not be a passive investor but,...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Shares | 40 |
93 C.R. - Q. 52
The conclusion in the Vancouver Art Metal Works was that a taxpayer loses rights under s. 39(4) "when he becomes a trader or a dealer - that is to...
25 April 1990 Memorandum (September 1990 Access Letter, ¶1413)
An officer or employee of a brokerage firm will be assimilated to a trader or dealer in securities only in respect of his transactions in...
86 C.R. - Q.16
Venture capital corporations generally would not be regarded as traders or dealers.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Shares | 11 |
84 C.R. - Q.41
Those who as a result of a course of conduct have a pattern of buying and selling may be precluded from electing.
Subsection 39(9)
Administrative Policy
S4-F8-C1 - Business Investment Losses
1.64 ... In the 2015 tax year, Mr. R has a capital loss of $300,000 from a disposition of a debt that was owing to him ... an SBC [that] qualifies...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Small Business Corporation | "substantially" and "principally" | 38 |
| Tax Topics - Income Tax Act - Section 50 - Subsection 50(1) | End of year references taxpayer | 343 |
| Tax Topics - Income Tax Act - Section 50 - Subsection 50(1.1) | 247 | |
| Tax Topics - Income Tax Act - Section 50 - Subsection 50(1) - Paragraph 50(1)(a) | Proactive collection efforts | 157 |
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(2) - Paragraph 40(2)(g) - Subparagraph 40(2)(g)(ii) | connection between loan and income-producing purpose | 320 |
| Tax Topics - Income Tax Act - Section 164 - Subsection 164(6) | Limitation on BIL carryback | 96 |
Subsection 39(10)
Administrative Policy
31 May 2013 External T.I. 2013-0480431E5 F - Deduction from business investment loss
An individual claimed a capital gains deduction ("CGD") in the amount of $250,000 resulting from Trust X's allocation of a net taxable capital...
Subsection 39(12) - Guarantees
Cases
Abrametz v. Canada, 2009 DTC 5828, 2009 FCA 111
The Trial Judge erred in implicitly treating the taxpayer's claim for a business investment loss as being governed by s. 39(12). The principal...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(1) | 201 |
See Also
Gordon v. The Queen, 96 DTC 1554, [1996] 3 CTC 2229 (TCC)
After finding that an amount paid by the taxpayer to related persons pursuant to the taxpayer's guarantee of an obligation of a corporation owned...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(2) - Paragraph 40(2)(g) - Subparagraph 40(2)(g)(ii) | income-producing purpose at time guarantee given | 181 |