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.
MINISTER/DEPUTY MINISTER'S OFFICE 97-03343M
ADM'S OFFICE
RETURN TO 15TH FLOOR, ALBION TOWER
July 23, 1997
XXXXXXXXXX
Dear XXXXXXXXXX:
I am writing in response to the letter of May 7, 1997, from XXXXXXXXXX in your office, regarding the income tax consequences of a proposed disposition of property by one of your constituents, XXXXXXXXXX, to her former common-law partner.
In general terms, the current provisions of the law provide for a tax-free rollover of certain assets between spouses or former spouses. The definition of spouse in the Income Tax Act was added to include a common-law partner but, unfortunately, it only has application after 1992. Therefore, the tax-free rollover provision for a spouse or former spouse does not apply to XXXXXXXXXX, since she and her partner became separated before 1993.
At the time XXXXXXXXXX and her former common-law partner separated in November 1992, there was a provision in the Act that would have allowed certain tax-free transfers of property between common-law couples. Officials in the Income Tax Rulings and Interepretations Directorate have been examining whether or not that provision could have application to a transaction that will take place in 1997.
In order for the provision to apply to common-law couples, the transfer had to be under a support or maintenance order of a competent tribunal for the maintenance of the individual who got the property. However, in the course of recent conversations between Rulings and XXXXXXXXXX, and an examination of the proposed order, it was establised that the provision would not have applied even if the transfer had taken place in the year of separation. Under the proposed order, there is no provision for the maintenance of XXXXXXXXXX former common-law partner although there is provision for maintenance payments to her for the children. XXXXXXXXXX has been advised that the rollover provision will not be applicable to any transfer she makes at this time.
I hope that the foregoing comments will be helpful.
Yours sincerely, Jane Stewart, P.C., M.P.
John F. Oulton
957-2141
May 22, 1997