diff --git a/tests/neg-custom-args/captures/io.scala b/tests/neg-custom-args/captures/io.scala
new file mode 100644
index 000000000000..a9636b045694
--- /dev/null
+++ b/tests/neg-custom-args/captures/io.scala
@@ -0,0 +1,21 @@
+sealed trait IO:
+  def puts(msg: Any): Unit = println(msg)
+
+def test1 =
+  val IO : IO retains * = new IO {}
+  def foo = IO.puts("hello")
+  val x : () => Unit = () => foo  // error: Found: (() => Unit) retains IO; Required: () => Unit
+
+def test2 =
+  val IO : IO retains * = new IO {}
+  def puts(msg: Any, io: IO retains *) = println(msg)
+  def foo() = puts("hello", IO)
+  val x : () => Unit = () => foo()  // error: Found: (() => Unit) retains IO; Required: () => Unit
+
+type Capability[T] = T retains *
+
+def test3 =
+  val IO : Capability[IO] = new IO {}
+  def puts(msg: Any, io: Capability[IO]) = println(msg)
+  def foo() = puts("hello", IO)
+  val x : () => Unit = () => foo()  // error: Found: (() => Unit) retains IO; Required: () => Unit