Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Whether the capital gains exemption is available on a sale of property? Would a corporate sale of property create a capital dividend account ("CDA") balance that could be paid out as tax-free dividends? Could the corporation use the replacement property rules to replace the property that was sold and defer the capital gain?
Position: Question of fact.
Reasons: See response.
XXXXXXXXXX
2013-049116
K. Robinson
June 18, 2013
Dear XXXXXXXXXX:
Re: Request for Comments Sale of Property
This is in response to your correspondence of May 29, 2013 wherein you requested our views on the income tax implications pertaining to the sale of certain property.
Written confirmations of the tax implications inherent in particular transactions are provided by this Directorate where the transactions are proposed and are the subject matter of an advance income tax ruling submitted in the manner set out in Information Circular 70-6R5, "Advance Income Tax Rulings", dated May 17, 2002. This Information Circular and other Canada Revenue Agency ("CRA") publications can be accessed on the internet at http://www.cra-arc.gc.ca/formspubs/menu-e.html. Where a particular transaction has already been completed, a review of the relevant facts and circumstances surrounding the situation would be required. Such review would normally be conducted by the applicable Tax Services Office ("TSO") during the course of an income tax audit which, if undertaken, would be carried out after the particular taxpayer has prepared and filed its income tax return for the year.
The situation described in your correspondence does not appear to involve or otherwise identify a particular interpretational concern with respect to a particular provision of the Income Tax Act and, in our view, appears to be more in the nature of a request for general tax planning advice. The CRA does not offer tax planning advice and consequently we are unable to provide any comments regarding your client's situation. However, we would like to mention that the CRA's website contains useful information that may be of some assistance and, in particular, the following publications provide guidance on the general topics you mentioned in your letter: T4003 "Farming Income", IT-66R6 - "Capital Dividends" and IT-259R4 - "Exchange of Property".
Yours truly
Michael Cooke
Manager
Business Income and Capital Transaction Section
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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