Spousal rollover (s. 73)

An owner moving shares or other capital property to a spouse before a sale, or at death, meets this rule. It is found in subsection 73(1) of the Income Tax Act, which applies to a transfer that subsection 73(1.01) describes, subject to subsection 73(1.02), where both the individual and the transferee are resident in Canada at the time of transfer; subsection 70(6) is a separate rule for transfers on death. The tax is deferred, not removed: the recipient inherits the cost.

What the CRA says

The CRA says you generally do not have a capital gain or loss if you give capital property to your spouse or common-law partner, or to certain trusts, and that the recipient is considered to have bought it for the same amount you are considered to have sold it for. The transferor may elect in the return for the year of transfer not to have subsection 73(1) apply, which results in a disposition. Other rules, such as attribution, may still apply.

What to ask

• Whether the property is capital property
• Whether an election out is being made, and where
• How attribution rules affect later income or gains

See how to transition a family business through a sale and estate freezes.