Cases
Klotz v. The Queen, 2004 DTC 2236, 2004 TCC 147, aff'd 2005 DTC 5279, 2005 FCA 158
Prints which the taxpayer purchased without seeing or taking personal possession of and then immediately donated to a Florida university were found in obiter to constitute personal-use property. The interpretation advanced by the taxpayer - that every property that was not used or held for an income-producing purpose was a personal-use property - was to be preferred. In any event, even if, as contended by the Crown, a property must actually be used or enjoyed by the taxpayer to qualify as a personal-use property, the prints here so qualified because "one way of using an object is to give it away, whether the motive be altruistic, charitable or physical."
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 118.1 - Subsection 118.1(1) - Total Charitable Gifts | 113 | |
| Tax Topics - Income Tax Act - Section 163 - Subsection 163(2) | 38 | |
| Tax Topics - Statutory Interpretation - Interpretation/Definition Provisions | "includes" is expansive | 61 |
See Also
Plamondon v. The Queen, 2011 DTC 1137 [at 746], 2011 TCC 47 (Informal Procedure)
Hogan J found that dried insects donated by the taxpayer to Laval University were individually appraised and did not "form an unbreakable set," and thus were not a set (as per s. 46(3)), so that under s. 46(1), each insect had an adjusted cost base of $1,000. Before so concluding, he disagreed with the expansive interpretation of personal-use property in Klotz, stating (at para. 15):
In English, the ITA uses the word "primarily". The Oxford English Dictionary, third edition, defines "primarily" as follows: "to a great or the greatest degree; for the most part, mainly". Thus, the property must unequivocally be for the use and enjoyment of the taxpayer. If Parliament had wanted there to be only two types of property, it could have defined PUP as all property that is not income property However, that was not what Parliament did.
Here, the taxpayer "prepared them only for donation. There was no real use" (para. 19) (after citing Glaxo Wellcome as to "use").
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 46 - Subsection 46(3) | 83 |
Donato v. The Queen, 2009 DTC 1384 [at 2111], 2009 TCC 590
Cartoons that the taxpayer donated to Brock University were not personal-use property given that the drawings had been created by him in the course of his work as a free-lance cartoonist. However, if the drawings instead had been donated by his wife, they would have qualified as personal personal-use property.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 152 - Subsection 152(4) - Paragraph 152(4)(a) - Subparagraph 152(4)(a)(i) | reasonable not to foresee rectification order | 94 |
Administrative Policy
2 November 2023 APFF Roundtable Q. 9, 2023-0982911C6 - APFF - Congrès 2023 - Table ronde sur la fiscalité
Madame Y made a cash purchase of a bitcoin on a central exchange platform in order that she could ultimately pay for items online. Subsequently, in 2023, the exchange platform was the victim of fraud and Madame Y lost access to her bitcoin. In the course of discussing the character and timing of her loss, CRA stated that “the mere holding of cryptocurrency for future use, i.e., for the purchase of products online, does not make the cryptocurrency personal-use property.”
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Loss v. Loss - Damages | bitcoin loss from fraud might be capital loss, and timing of a loss could be governed by s. 44(2) | 241 |
| Tax Topics - Income Tax Act - Section 54 - Proceeds of Disposition - Paragraph (b) | damages for loss of bitcoin from fraud would be compensation for property unlawfully taken | 94 |
20 June 2023 STEP Roundtable Q. 1, 2023-0961341C6 - Personal-Use Property
CRA confirmed that since an estate is a separate taxpayer from the deceased, items that were personal-use property (PUP) of the deceased and, thus, deemed on death to be disposed of for minimum proceeds and ACB of $1,000 per item pursuant to s. 46(1), could potentially not be PUP to the estate (e.g., they could be put in storage). If not PUP to the estate, they would be deemed pursuant to s. 70(5)(b) to have an ACB equal to their FMV immediately before death (without regard to the $1,000 rule) and any subsequent sale would generally give rise to a capital gain or loss computed in the normal way.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 46 - Subsection 46(1) | personal-use property (PUP) of the deceased may not be PUP of the estate | 175 |
7 October 2016 APFF Financial Strategies and Instruments Roundtable Q. 4, 2016-0651791C6 F - Choix 45(2) et (3) - immeuble à logements
If a duplex was a single property, the election of February 22, 1994 respecting the elimination of the $100,000 capital gains exemption would be engaged by a disposition of the unit occupied by the owner, thereby forcing the making of a decision as to whether to designate the residence as a principal residence, to the detriment of such a designation for the individual’s chalet. Where an individual owning a triplex occupies 40% of it, can the related land give rise to an allowable capital loss? How does the February 22, 1994 election apply in such a case? CRA responded:
[A] building and the land on which the building is located are a single property under the private law applicable in Québec.
[Reg.] 1102(2)…applies only for the purposes of calculating capital cost allowance, and recapture or terminal loss.
Consequently, where a taxpayer realizes a capital loss on the disposition of a property comprising a building and the land upon which it is situated, subparagraph 40(2)(g)(iii) effectively denies the loss only if the property is a PUP under section 54. …
Regarding the February 22, 1994 election, the CRA still considers as valid the form, Election to Report a Capital Gain on Property Owned at the End February 22, 1994, filed by a taxpayer in accordance with the instructions and information available at that time.
| 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 Regulations - Regulation 1102 - Regulation 1102(2) | Reg. 1102(2) deems building to be separate from land and does not bifurcate the land | 176 |
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(2) - Paragraph 40(2)(g) - Subparagraph 40(2)(g)(iii) | capital loss recognition on land underlying duplex used 40% personally | 78 |
7 November 2014 External T.I. 2014-0536261E5 F - Bien à usage personnel
An individual lease a foreign real estate property to the individual's brother, to live there with his family, for a fair market value rent. Is the property a personal-use property? CRA responded:
The fact that a property is used to produce an income does not prevent it from qualifying as property for personal use; it all depends on the primary use of the property. The term "primarily" is not defined in the Act. …Plamondon…defined… "primarily" as "to a great or the greatest degree; for the most part, mainly" and "principal" as "the most important, the first among many."
…If the examination of the facts of the case reveals that the property is used primarily for the personal use and enjoyment of the taxpayer's brother, the property could qualify as personal-use property.
2013 Ruling 2012-0443081R3 - Distribution of pre-72 Capital Surplus on Hand
Are non-interest bearing loans, for example to a non-resident corporation or to a non-resident child of a parent, "personal-use property" ("PUP") – so that for example they would not be "specified foreign property" in s. 233.3(1)? After citing Plamondon v. The Queen, 2011 TCC 47, and in finding that such debt generally would not be PUP, CRA stated:
[T]o qualify as PUP under paragraph (a) the property must be owned and actually used primarily for the personal use or enjoyment of the taxpayer or a related person. … A debt would normally only qualify as PUP under paragraph (b), which requires the debt result from the disposition of a property which itself was PUP.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 186 - Subsection 186(1) | circularity issue | 673 |
| Tax Topics - Income Tax Act - Section 88 - Subsection 88(2) | 737 |
12 February 2013 Internal T.I. 2012-0437211I7 F - NRT rules and subsection 164(6)
The estate of an individual was deemed to be resident in Canada. At the time of his death, the deceased held his Canadian principal residence. A capital loss also was realized on the disposition by the estate of the residence. The executor had elected under s. 164(6)(c) to carry back this and other capital losses to the terminal return of the deceased.
The Directorate referred to E2008-0280751E5 and E2002-0148955, where CRA had stated that a capital loss from the disposition of a personal residence of the deceased was eligible under s. 164(6) if it was not personal use property to any beneficiary or a related person.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 164 - Subsection 164(6) | s. 94 deemed resident trust could carry back under s. 164(6) re capital loss on non-TCP shares | 318 |
| Tax Topics - Income Tax Act - Section 94 - Subsection 94(3) - Paragraph 94(3)(a) | estate of resident deceased with one resident beneficiary was subject to s. 94(3) | 315 |
3 June 2011 STEPs Roundtable Q. 10, 2011-0401871C6 F - Personal use property of an estate
a cottage owned by an estate which has not been used by any of the beneficiaries or related individuals would not be personal-use property, so that a capital loss realized by the estate on its sale would be deductible against capital gains of the estate.
23 April 2003 Internal T.I. 2003-0008767 F - Benefits Conferred on Shareholders
The corporation built a luxury house on land belonging to its shareholder for his exclusive benefit and use and to his specifications, with its cost exceeding its FMV at completion. After the construction, the corporation allowed its shareholder and his family to use the house exclusively for personal purposes. Subsequently, it transferred the house to its shareholder in a sale made at FMV.
The Directorate found that the house was personal-use property notwithstanding that its use generated a taxable s. 15(1) benefit to the shareholder.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) | shareholder benefit where house sold to shareholder at a loss attributable to its having been built to his luxury specifications | 194 |
| Tax Topics - Income Tax Act - Section 46 - Subsection 46(4) | policy of s. 46(4) supported the finding of a shareholder benefit when personal-use property of corporation sold at a loss (representing luxury elements that did not add value) to its shareholder | 238 |