A major obstacle in employing the loss realization strategy has been the requirement to recognize capital losses within the first taxation year of a graduated rate estate (GRE). On August 12, 2024, the Department of Finance released several draft legislative packages for feedback. Among these, the Technical Amendments package proposed allowing a Subsection 164(6) election, which would enable losses recognized in any of the first three taxation years of the GRE to be considered as realized in the final personal tax return. Additionally, relief from certain stop-loss rules for losses incurred by a GRE and subject to a Subsection 164(6) election would be applicable for the same three-year timeframe.
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