A taxpayer was deemed to realize a capital loss pursuant to s. 128.1(4)(b) on ceasing to be resident in Canada, which would be a business investment loss (BIL) if the shares were disposed of to a person with whom the taxpayer was dealing at arm's length. In finding that this condition was not satisfied (no BIL), CRA stated:
Taking into account the wording of paragraphs 128.1(4)(b) and 128.1(4)(c), we are of the view that a capital loss resulting from the application of paragraph 128.1(4)(b) is not a capital loss resulting from the disposition of a property to a person with whom the taxpayer was dealing at arm's length.