Canada’s Finance Department has published draft legislative proposals for a number of the measures on September 13, 2013 that were first introduced on 21 March 21, 2013 as part of the 2013 federal budget. By the draft proposals derivative transactions cannot be used to convert ordinary income into capital gains through “character conversion transactions” (CCTs).
Again, the proposals include a measure to assure that the tax consequences of disposing of property cannot be escaped by entering into an arrangement that is financially equal to a disposition of the property naming synthetic disposition arrangement (SDA). These rules are plannedto use where all or substantially all of a taxpayer’s chance of loss and opportunity for profit with respect to a property owned by that taxpayer are removed via an SDA.
