A loss sustained by the trust on the disposition of property involving an affiliated person is not deductible. However, the loss may give rise to a carry-over mechanism, with rules that vary according to whether the property concerned is depreciable property or non-depreciable property.

Such a loss is deductible in certain circumstances, such as when:

• the trust is deemed to have disposed of:
  • property further to its immigration or emigration, or further to a change in use of the property,
  • a stock option that has expired,
  • a debt that has become a bad debt,
  • a share issued by a corporation that has gone bankrupt or that was insolvent at the time it was wound up;
• the trust is exempt or ceases to be exempt from Québec income tax within 30 days following the disposition of the property.