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 CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues: Where an individual disposes of shares at a loss and an RRSP trust subsequently acquires the shares, will subparagraph 40(2)(g)(i) apply to deny the loss?
Position: No. However, GAAR may apply
Reasons: The acquisition of shares by the RRSP trust within 30 days of the initial disposition would not constitute an acquisition of the property by an "affiliated person".
XXXXXXXXXX 2001-010543
M. P. Baldwin, CA
October 24, 2001
Dear XXXXXXXXXX:
Re: Superficial Loss - RRSP Trust
This is in reply to your letter of October 3, 2001 regarding the disposition of shares at a loss by an individual, and the subsequent acquisition of the shares by an RRSP trust within 30 days of the disposition.
Written confirmation of the tax implications inherent in particular transactions are given by this Directorate only where the transactions are proposed and are the subject matter of an advanced income tax ruling request. For more information concerning advance income rulings, please refer to Information Circular 70-6R4 dated January 29, 2001. Copies of information circulars are available at your local Tax Services Office or on the Internet at http://www.ccra-adrc.gc.ca/formspubs/menu-e.html. Where the particular transactions are completed, the enquiry should be addressed to the relevant Tax Services Office. However, we are prepared to provide the following general comments, which may be of assistance.
Subparagraph 40(2)(g)(i) of the Income Tax Act (the "Act") applies to deny a loss which is a superficial loss, as defined in section 54 of the Act. Subparagraph 40(2)(g)(i) of the Act would not apply where a trust acquires shares previously disposed of by an individual. However, the Act contains a general anti-avoidance rule (GAAR) which may apply to deny a tax benefit unless the transaction may reasonably be considered to have been undertaken or arranged primarily for bona fide purposes other than to obtain the tax benefit.
We trust that the above comments will be of assistance.
Yours truly,
Roberta Albert, CA
For Director
Financial Industries Division
Income Tax Rulings Directorate
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