3 October 1989 Administrative Letter 58196 F - Election to Transfer Property at FMV

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.

October 3, 1989

Dear Sirs:

Re:  Technical Interpretation Subsection 70(6.2) of the Income Tax Act (the "Act")

This is in reply to your letter of June 2, 1989, in respect of the above noted topic as it relates to the following situation:

1.     A Canadian resident taxpayer, A, dies in 1989.  Pursuant to her Will, she bequeaths her interest in land and an "Adjacent building" to her spouse, B.

2.     The V-Day value of the land is $100,000 and the fair market value of the land is $1,100,000.

You requested a technical interpretation as to whether:

a)     Upon the election by A's executors pursuant to subsection 70(6.2) an undivided 10% interest in the land may be transferred at its fair market value;

b)     Subsection 70(6) of the Act will not apply to the transfer of that portion of the land; and

c)     Subsection 70(6) will apply to the transfer of a 90% interest in the land and a 100% interest in the "adjacent building".

Subsection 70(6.2) of the Act provides that the mandatory provisions of subsection 70(6) of the Act do not apply to any property in respect of which the legal representative of the deceased taxpayer has elected to have subsection 70(5) of the Act apply.  Paragraph 70(5)(a) of the Act deems a taxpayer to have disposed, immediately before his death, of each property owned by him at that time that was a capital property.  Where the property involved is real estate, we interpret the words "each property" in paragraph 70(5)(a) of the Act to mean all of a specific property that is described in a deed registered in the name of the deceased.  We do not agree that the reference to each property in that paragraph can be taken to mean a portion of that property. I our opinion, paragraph 70(6.2) of the Act does not permit a election in respect of an arbitrary portion of a separately registered real property.

We trust these comments will be of assistance to you.

Yours truly,

for DirectorFinancial Industries DivisionRulings Directorate