You can elect to have disposed of these shares for nil proceeds producing a capital loss. You would do this by declaring the loss on schedule 3 and attaching a note that you want subsection 50 (1) to apply. This must be done in the same tax year that the company declared bankruptcy or became insolvent.
You have up to 10 years to request a late filed election for a past year under the Taxpayer Relief provisions; however, you may be liable for a penalty of $100/month for each month that the election is late.
If you make this election, you are then deemed to have re-acquired the shares at NIL, so that (if by some miracle) the shares become born again or you receive a settlement, you have a capital gain.
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