Mr agreed in his separation agreement with Mrs to transfer to her a capital property. However, he died before the transfer was made. Does CRA still consider that s. 73(1) does not apply following death? CRA responded:
[A]ny particular capital property of an individual (other than a trust) is required to be transferred in circumstances to which subsection 73(1.01) applies. … Accordingly, since Mr. died before having completed the transfer of the capital property, that transfer instead was effected by his estate, which is a trust and does not comply with the requirements of subsection 73(1).
When queried on this, a Finance representative stated:
The Department of Finance is ready to consider the issue identified in the question to determine whether the rules give rise to anomalies in certain circumstances in tax policy terms, in the context of its on-going revision of the ITA rules.