Would transferring publicly traded shares to a lender, as collateral for a loan, result in a disposition? CRA referred to the rule in para. (j) of the definition of disposition, and to the statement in 106443 Canada that:
“The transferor must not have the intention of absolutely giving up ownership to the property transferred. He must retain the power of recovery.
CRA then stated:
A key factor in determining whether property (such as shares of a publicly traded corporation) is transferred for the purposes only as security for a debt or loan includes whether the transferor intended not to give up (and the transferee not to acquire) absolute ownership (i.e., beneficial ownership) of the property.
Therefore, generally speaking, a disposition would not occur when publicly traded shares owned by a taxpayer are transferred to another person for the purpose only of securing a debt or loan.