Paragraph 80.6(2)(c)
Articles
Edward Miller, Matias Milet, "Derivative Forward Agreements and Synthetic Disposition Arrangements", draft version of paper for CTF 2013 Conference Report.
Legal form prevails for leases (p. 28)
[P]ursuant to paragraph 80.6(2)(c), subsection 80.6(1) will not apply if the SDA in question is a lease of tangible property or, for civil law purposes, corporeal property. According to the Technical Notes, the SDA Rules are not intended to displace the existing tax rules with respect to such leases. Apparently, and contrary to the general thrust of the synthetic disposition rules, this is an area of the law where legal form and not economic substance will continue to be determinative of tax consequences. [fn 66: See e.g. CRA, Income Tax Technical News no. 21… "…in the absence of sham…a lease is a lease and a sale is a sale."]
Paragraph 80.6(2)(e)
Articles
Edward Miller, Matias Milet, "Derivative Forward Agreements and Synthetic Disposition Arrangements", draft version of paper for CTF 2013 Conference Report.
Example of over-one year SDA with disposition within one year (p. 29)
[W]here an "American-style" option (an option that can be exercised at any time during its term) is part of an SDA creating a synthetic disposition period of 400 days, but the option holder exercises the option after 180 days, at the outset this was an SDA with a period of more than one year such that subsection 80.6(1) would apply but for the exception in paragraph 80.6(2)(e). That exception would apply here because the property was disposed of as part of the arrangement or at least one component of the arrangement (the option).