1990 Round Table
QUESTION A3
Income or Capital Gain: Rollover of Assets Followed by Immediate Sale of Assets
With respect to income/capital determinations, what is Revenue Canada's present policy where:
(a) An individual rolls a capital asset with an accrued gain to a corporation which he controls and the corporation sells the asset and realizes the gain soon after the rollover?
(b) A parent corporation rolls a capital asset with an accrued gain to a controlled subsidiary corporation and the subsidiary sells the asset and realizes the gain soon after the rollover?
DEPARTMENT'S POSITION
We addressed these questions at the 1984[FN1: "Revenue Canada Round Table", in Report of Proceedings of the Thirty-Sixth Tax Conference, 1984 Conference Report (Toronto: Canadian Tax Foundation, 1985), 783-847, at 820.]and 1983 [FN2: Robert J.L. Read, "Technical Matters", in Report of Proceedings of the Thirty-Fifth Tax Conference, 1983 Conference Report (Toronto: Canadian Tax Foundation, 1984), 783-795, at 785.] tax conferences, and our positions then announced remain unchanged. In both situations we are prepared to accept that the transfer of property pursuant to subsection 85(1) of the Act, in itself, does not change the nature of the property transferred, even when the property that is the subject of the transfer is sold to an arm's-length third party within a very short time thereafter.