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:
Where property is held by a non-resident and a resident in joint tenancy, should the section 116 certificate for the disposition by the non-resident be at half the proceeds?
Position:
Yes.
Reasons:
In true joint tenancy, owners on title as joint tenants are equal owners and can not sell more than their proportionate share.
962662
XXXXXXXXXX J. Stalker
Attention: XXXXXXXXXX
February 6, 1997
Dear Sirs:
Re: Section 116 Certificate
We are writing in response to your letter of July 31, 1996 in respect of the "certificate limit" referred to in subsection 116(2) of the Income Tax Act (Canada) (the "Act") where property is held in joint tenancy.
You have presented a scenario where a non-resident and a resident of Canada own taxable Canadian property in joint tenancy. The non-resident provided 100% of the funds to acquire the property, and is the beneficial owner. The property is non-income producing.
You mention that a recent request for a section 116 certificate pursuant to subsection 116(2) of the Act resulted in the certificate limit being issued at one-half of the proceeds of disposition, where you had expected the certificate limit to be equal to the full proceeds of the disposition.
It is our understanding that in the above scenario, provided it is a true joint tenancy, the tenants are equal owners of the property and each joint tenant can not sell more than his or her half interest. Accordingly, it would be correct for the certificate limit to be issued at one-half of the proceeds. If, in the situation you describe, the non-resident is receiving all of the proceeds, we would question whether it was a true joint tenancy.
The above comments represent our general views with respect to the subject matter of your letter. These comments do not constitute an advance income tax ruling and therefore, as described in paragraph 22 of Information Circular 70-6R3, are not binding on the Department.
Yours truly,
for Director
Reorganizations and International Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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