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End of attention
The net gain - that is, the sum of gains less losses - from the disposal of tainted assets is included in passive income.
What is a tainted asset?
Tainted assets include:
- all shares, interests in trusts and interests in partnerships
- most financial instruments - such as loans, forward and futures contracts, swaps, other securities and life assurance policies
- rights or options over any of the above.
An asset will also be tainted if it is held by a CFC to derive tainted rental income. In order to determine whether an asset is used to produce tainted rental income, you must look at the use of the asset over the whole time of ownership. If the purpose changed during that period, the asset will be treated as being used to produce tainted rental income if this was the purpose for the majority of the period of ownership.
An asset will be treated as a tainted asset if it is not trading stock and is not used solely in carrying on business.
Exclusion of commodity investments
Commodity investments are not tainted assets. They are treated separately when working out net tainted commodity gains.
Last modified: 05 Dec 2006QC 18000