2020-0865071E5 Subsection 164(6) - time limit

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA. Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: Will the CRA allow more time for the application of subsection 164(6) for loss carrybacks by an estate?

Position: The CRA is unable to extend the disposition time limit.

Reasons: See below.

Author: Robinson, Katie

Section: 164(6)

XXXXXXXXXX                                                                                                        2020-086507
                                                                                                                                K. Robinson
October 16, 2020


Re:   Technical Interpretation Request
         Subsection 164(6) – Time Limit for Dispositions

We are writing in response to your email of September 22, 2020, regarding the time limit for dispositions in subsection 164(6) of the Income Tax Act (“Act”).  Specifically, you are asking whether the Canada Revenue Agency (“CRA”) will allow more time for the application of subsection 164(6) of the Act.  You indicated that XXXXXXXXXX has received feedback from XXXXXXXXXX that delays in the probate process may delay the timing of the disposition of the properties of an estate.

Our comments

This technical interpretation provides general comments about the provisions of the Act and the Income Tax Regulations.  It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination.  The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R10, Advance Income Tax Rulings and Technical Interpretations.

Your request concerns the application of subsection 164(6) of the Act.  In the course of administering the graduated rate estate of a taxpayer, subsection 164(6) of the Act allows a deceased taxpayer’s legal representative to elect to treat certain capital losses and terminal losses of the taxpayer’s graduated rate estate for its first taxation year, as losses of the taxpayer for the taxpayer’s last taxation year.  The election, which results in the carry back of the elected amount to the final return of the deceased, can be useful in addressing potential double taxation which may arise, for example, where the deceased held corporate shares with accrued gains at death.

However, for this provision to apply, the legal representative must dispose of the capital property of the estate or all of the depreciable property of a prescribed class of the estate within the first taxation year of the estate. Subsection 164(6) of the Act does not provide the Minister of National Revenue with any discretion to extend this period.

Furthermore, the Government of Canada has taken and continues to take action to limit the impact of the COVID-19 pandemic on Canadians.  Among these measures, Bill C-20, entitled An Act respecting further COVID-19 measures, which received Royal Assent on July 27, 2020, enacted the Time Limits and Other Periods Act (COVID-19) (“COVID-19 Time Limits Act”).  The COVID-19 Time Limits Act temporarily enables the Minister responsible for the application of a federal Act of Parliament or regulation to suspend or extend certain time limits and to extend other periods in relation to specified Acts and regulations for a maximum of six months, by order.  The specified Acts of Parliament and regulations are identified in the schedule to the COVID-19 Time Limits Act.  Although certain provisions of the Act are mentioned therein, no reference is made in this schedule to subsection 164(6).

As such, while we understand that delays in the probate process may delay the timing of the disposition of the properties of an estate, the CRA is unable to extend the time limit for the dispositions in subsection 164(6) of the Act beyond the first taxation year of the graduated rate estate.

Finally, we would like to note that the role of the CRA is to administer and enforce the Act as passed by Parliament.  The concern raised in your email relates to tax policy, which is the responsibility of the Department of Finance.

We trust that our comments will be of assistance.

Yours truly,


Marina Panourgias, CPA, CA, TEP
Manager, Trust Section I
Financial Industries and Trusts Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch

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