Words and Phrases - "money"
19 January 2024 External T.I. 2020-0865921E5 F - Foreign Currency dispositions by an individual
Does s. 39(1.1), which applies to dispositions by an individual of foreign currency banknotes or coins, extend to dispositions of foreign currency held by an individual on deposit at a financial institution? CRA noted that in 2020-0868031I7:
Based on a textual, contextual and purposive interpretation of subsection 39(1.1), we concluded that the phrase “dispositions of currency other than Canadian currency” in that subsection includes dispositions of foreign currency held by an individual in a chequing or current deposit account at a financial institution, to the extent that the individual is entitled to withdraw the currency on deposit at any time, convert it into another currency at any time, or use it to make a purchase or a payment at any time.
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 financial institution by an individual rather than being restricted to bills or coins, CRA noted that, in addition to a more technical meaning, “currency” also could refer “simply to ‘money’ that is used in a country, with the definition of ‘money’ including sums in a bank account,” and that “it is relevant to consider that subsection 39(1.1) does not apply to a specialized audience,” e.g., it could apply to an individual “using foreign currency on a holiday in a foreign country,” the Directorate stated:
[I]n the context of subsection 39(1.1), the phrase “dispositions of currency other than Canadian currency” includes situations where foreign currency funds in a chequing or current deposit account, which entitles the depositor to withdraw the currency on deposit at any time, are converted into another currency or used to make a purchase or a payment.
Where s, 39(1.1) did not apply to a disposition of capital property, s. 39(1) would apply (and not s. 39(2), which applies to FX-denominated obligations).
14 November 2002 Internal T.I. 2002-0171377 F - REER PLACEMENT ADMISSIBLE
When asked whether IT-320R2, para. 14 indicated that money denominated in any foreign currency is a qualified investments and whether cash denominated in U.S. dollars can be held in an RRSP, the Directorate stated:
"[M]oney" means banknotes and coins that are legal tender in the country of issue. We are also of the opinion that deposits referred to in paragraph (a) of the definition of qualified investment in section 204 may be denominated in Canadian dollars or in any foreign currency.
20 June 2023 STEP Roundtable Q. 3, 2023-0968091C6 - Trust Reporting – Definition of Money and Treatment of Dividend Receivable
Pursuant to s. 150(1.2)(b), the exception from trust reporting requirements under s. 150(1.1) - that may be available to individuals with no Part I tax payable or relevant dispositions - can apply to a trust for a particular tax year where the trust holds assets restricted to listed types of property including “money,” with an FMV not exceeding $50,000 throughout the year. CRA indicated that a trust holding a gold or silver bar or coin would not satisfy the types-of-property test, indicating that such items did not fit the ordinary meaning of money as they would not service as a medium of exchange in a financial transaction.
Casa Blanca Homes Ltd. v. The Queen, 2013 TCC 338 (Informal Procedure)
The appellant entered into 14 purchase agreements with a property developer to acquire lots. The appellant assigned 12 agreements to third parties for $820,865 - $634,760 for deposit recoveries (i.e., reflecting that deposits paid by the appellant to the developer would now be held by the vendor to be credited to the assignees on completion of the purchases) and $186,105 in assignment fees. The Minister applied the single-supply doctrine to treat the entire amount as consideration for an interest in real property.
Hogan J granted the taxpayer's appeal. He discussed (at paras. 13-14) the indicia in O.A. Brown, that "a factor indicative of a single supply is the degree of interconnection and interdependence of the elements" and that "conversely, a factor indicative of multiple supplies is that each alleged separate supply could be purchased individually," and referred favourably to the analysis in Barnett 2011. The assignment of the purchase agreements and of rights to the deposits were not inextricably linked, as it would be quite possible to structure a sale where there was no assignment of the deposit and the assignee gave a fresh deposit to the property developer. Accordingly, there were two supplies: of a financial instrument and of real property. Alternatively, "a deposit can be characterized as a pool of money retained until such time as it is applied in partial payment or forfeited" (para. 32), and a supply of money is not a supply of property or a service under the ETA. Either way, the consideration paid for the deposit recoveries was not taxable.
| Locations of other summaries | Wordcount | |
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| Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Debt Security | non-refundable deposit under purchase agreement was a debt security | 112 |