On administering an estate, the executors discover share certificates of public corporations that have become worthless (now bankrupt) and for which the deceased had never claimed capital losses. In expanding on its position stated in 2012-0442961C6 that a net capital loss might be available if claimed within the 10-year period set out in s. 152(4.2), CRA indicated that:
- An application to request that the Minister exercise discretion under s. 152(4.2) to amend an income tax return for a particular taxation year must be made in writing on or before the day that is 10 calendar years after the end of that year.
- This relief is generally provided when the Minister is satisfied that the request for adjustment would have been processed if it had been made within the normal reassessment period.
- Relief may be available if no notice of determination was issued with respect to the net capital loss of a particular taxation year.
- The 10-year limit applies to the year in which the loss was incurred or the allowable capital loss is being applied against taxable capital gains in that year, or to a subsequent year in which the net capital loss is being applied. In both cases, the taxation year must otherwise not be open for reassessment.
For example, if a capital loss was realized in 2008 as the result of the dissolution of a public corporation, since that year would be beyond the 10-year limit, the allowable capital loss could not be applied to eliminate the Part I tax on a smaller taxable capital gain realized in that year, even though such taxable capital gain would have the effect of reducing the net capital loss that could be carried forward from 2008. However, that net capital loss (subject to reductions from further subsequently realized taxable capital gains of the deceased) could be claimed to reduce a taxable capital gain realized in 2015 pursuant to a request made pursuant to s. 152(4.2) in 2023.