Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: Is there any relief when an individual transfers property to an RRSP at a loss?
Position: No
Reasons: The loss is denied under 40(2)(g)(iv), and there is no mechanism to provide relief.
April 20, 2001
Brian Darling Sherry Thomson
2001-008077
Loss on transfer to RRSP
As stated in paragraph 24 of IT-124R6 Contributions to Registered Retirement Savings Plans, any resultant capital loss on a transfer of a property to an RRSP is deemed to be nil for tax purposes by subparagraph 40(2)(g)(iv).
I spoke to Kevin Stackhouse, who works for Ed Williams at IRPPD to see if there was any administrative relief possible. He said he's been asked the question before, and there is none. The loss cannot be deducted, and it is not possible to reverse the transaction.
The superficial loss rules in 40(2)(g)(i) apply where 30 days before or after the disposition, a substituted property is acquired by the taxpayer, or an "affiliated person" as that term is defined in section 251.1. In this situation, the denied loss is added to the ACB of the property reacquired by the taxpayer or the affiliated person by virtue of 53(1)(f). Note, however, that a trust is not an "affiliated person" in relation to the individual (see E9831785 & E9830825), so the superficial loss rules don't apply on a transfer to a trust. (It is for this reason that the individual can sell the security in the market, and have the RRSP repurchase the security in the market without the superficial loss rules applying - see 1999-0007685.)
The "suspended loss" rules in subsection 40(3.3) to (3.6) apply to dispositions by a corporation, trust or partnership, so do not apply in this situation. (The suspended loss rules leave the loss with the vendor, to be realized once the affiliated person disposes of the property.)
To summarize, the loss is denied under 40(2)(g)(iv), without any mechanism to provide relief to the taxpayer.
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