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:
Why the deemed residence rules of subsection 110.6(5) of the Act do not apply for purposes of subsection 110.6(13) of the Act.
Position:
Subsection 110.6(5) of the Act only applies for purposes of subsections 110.6(2) and (2.1) (and subsection (3) before its repeal) of the Act, and not for purposes of subsection 110.6(13) of the Act.
Reasons:
Wording of subsection 110.6(5).
5-963646
XXXXXXXXXX C. Chouinard
March 26, 1997
Dear Sir\Madam:
Re: Capital Gains Election - Non-Resident
We are writing in reply to your letter of October 28, 1996, wherein you requested further clarification of the response we provided in our letter of October 11, 1996. More specifically, you inquire how subsection 110.6(5) of the Income Tax Act (the "Act") can cancel subsection 110.6(13) of the Act.
Subsection 110.6(5) of the Act is a relieving provision which provides that where an individual is resident in Canada at any time in a particular taxation year and throughout the immediately preceding or following taxation year, the individual is deemed to be resident in Canada throughout the particular year. However, subsection 110.6(5) of the Act only applies for purposes of subsections 110.6(2) and (2.1) of the Act. In addition, prior to the repeal of the $100,000 capital gains exemption, it also applied for purposes of the now repealed subsection 110.6(3) of the Act. Accordingly, the deemed residence rule of subsection 110.6(5) of the Act does not apply for purposes of subsection 110.6(13) of the Act.
As we indicated in our previous letter to you concerning subsection 110.6(19) of the Act, subsection 110.6(13) of the Act operates to exclude gains realized while an individual was a non-resident from the capital gains exemption. Therefore, only a taxpayer who was resident in Canada on February 22, 1994 and who otherwise met subsection 110.6(5) of the Act could file the capital gains election and claim the capital gains deduction under subsection 110.6(3) of the Act.
We trust that these comments will be of assistance.
Yours truly,
R. Albert
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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