The taxation of capital gains and losses has undergone a plethora of changes over the last three decades. With the preferential tax treatment of capital gains and the restrictions on capital loss deductibility, many taxpayers are motivated to obtain the more favourable treatment. Several provisions are in place to prevent tax avoidance or the inappropriate recognition of a capital loss. The restrictions discussed below do not include the many tax provisions in place with respect to non-arm’s-length transfers of property. These will be discussed in a later chapter.