{"id":1117,"date":"2014-05-05T16:16:03","date_gmt":"2014-05-05T16:16:03","guid":{"rendered":"https:\/\/thor.ca\/\/blog\/?p=1117"},"modified":"2014-05-05T16:16:03","modified_gmt":"2014-05-05T16:16:03","slug":"rulings-directorate-confirms-character-of-capital-property-is-preserved-on-rollover","status":"publish","type":"post","link":"https:\/\/www.thor.ca\/blog\/2014\/05\/rulings-directorate-confirms-character-of-capital-property-is-preserved-on-rollover\/","title":{"rendered":"Rulings Directorate confirms character of capital property is preserved on rollover"},"content":{"rendered":"<p>In <a href=\"http:\/\/thor.ca\/blog\/wp-content\/uploads\/2014\/05\/2013-0500891I7.pdf\">2013-0500891I7<\/a>, the CRA\u2019s Rulings Directorate reversed a proposed audit adjustment relating to a \u201cdrop and sell\u201d transaction.\u00a0 The parent company in the group (Parent) had borrowed money for a capital purpose and purchased forward contracts to hedge this loan.\u00a0 Before closing out the forward contracts (which were in the money), the parent rolled the contracts to its subsidiary (Subco) under s. 85(1).\u00a0 Subco closed out the contracts, realized a capital gain, and used its capital losses to shelter the capital gain.\u00a0 The CRA\u2019s local Tax Services Office (TSO) proposed to treat the gain realized by Subco as ordinary income because of the short holding period.\u00a0 The Rulings Directorate overruled the TSO,\u00a0 saying that the capital character of the forward contracts was preserved Subco\u2019s hands pursuant to the CRA\u2019s published policy reaching back to 1980.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>In <a href=\"http:\/\/thor.ca\/blog\/wp-content\/uploads\/2014\/05\/2013-0500891I7.pdf\">2013-0500891I7<\/a>, the CRA\u2019s Rulings Directorate reversed a proposed audit adjustment relating to a \u201cdrop and sell\u201d transaction.\u00a0 The parent company in the group (Parent) had borrowed money for a capital purpose and purchased forward contracts to hedge this&hellip;<\/p>\n","protected":false},"author":11,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-1117","post","type-post","status-publish","format-standard","hentry","category-corporate-tax"],"_links":{"self":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts\/1117","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/users\/11"}],"replies":[{"embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/comments?post=1117"}],"version-history":[{"count":0,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts\/1117\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/media?parent=1117"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/categories?post=1117"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/tags?post=1117"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}