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.
December 1, 2000
XXXXXXXXXX
Dear XXXXXXXXXX:
The Honourable Martin Cauchon, Minister of National Revenue, has asked me to reply to your letter of September 1, 2000 concerning the tax consequences of reregistering your shares in Canadian companies jointly with your daughter, resulting in joint tenancy with right of survivorship. For purposes of this letter, we have assumed that your daughter is not a minor, as different tax rules apply if property is transferred to a minor child.
It is a question of fact whether property has been transferred into a true joint tenancy. However, it is our view that the transfer of property solely owned by a taxpayer into a true joint tenancy arrangement between the taxpayer and his or her child, one in which beneficial ownership changes, results in a disposition, as title to the property vests in the child immediately. As a result, if a true joint tenancy arrangement were created, you would be considered to have disposed of a SO-per-cent interest in your shares to your daughter at fair market value on the date of the transfer, and you would be required to report the disposition on your tax return. The cost of the interest in the shares to your daughter would also be the fair market value on the date of the transfer. After the transfer, you and your daughter would each report 50 per cent of the income and capital gains (Or losses) from the shares.
I appreciate the opportunity to respond to your concerns.
Yours sincerely,
Bill McCloskey Assistant Commissioner Policy and Legislation Branch