Legal Issue: The appeal centered on the application of subsections 39(2) and 40(3.6) of the Income Tax Act (ITA) concerning a loss CIBC realized in 2007 from the redemption of shares. This loss was attributable to the fluctuation in the value of a foreign currency.
Key Question: Whether subsection 39(2) of the ITA deemed the loss to be a capital loss from the disposition of foreign currency before subsection 40(3.6) of the ITA deemed the loss to be nil.
Legal Proceedings:
Tax Court Inquiry: The Tax Court of Canada was asked to determine if paragraph 40(3.6)(a) of the ITA applied to deem CIBC's loss from the disposition of Class B Shares of CIBC Delaware Holdings Inc. to be nil.
Tax Court Decision: The Tax Court affirmed that paragraph 40(3.6)(a) of the ITA applied, deeming CIBC's loss to be nil.
Court's Decision:
The Federal Court of Appeal upheld the Tax Court's decision and dismissed CIBC's appeal, confirming that the loss from the disposition of shares was deemed nil under the ITA??.
