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.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department. Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
XXXXXXXXXX 932273
Attention: XXXXXXXXXX
December 21, 1993
Dear Sirs:
Re: Revision of Land Boundary Lines
This is in reply to your letter of August 2, 1993 wherein you requested our views as to whether a proposed revision of the boundary line between respective properties would result in a disposition of property. You described the following situation:
1. AG owns 80 acres of land comprising the north half of a quarter section of land. PF owns 80 acres of land comprising the south half of that same quarter section of land. Each respective 80 acre parcel is held under separate title.
2. AG and PF will agree to revise the boundary line so that 3 acres of the north half of the quarter section now owned by AG will becomes the property of PF and 3 acres of the south half of the quarter section now owned by PF becomes the property of AG. The two 3 acre parcels of land subject to the boundary revision are unimproved lands having the same fair market value.
3. After the boundary revision, both AG and PF will continue to own the same amount of land (80 acres) having the same value as before.
4. New plan numbers, showing the revised boundary line will be registered on title.
5. AG and PF deal at arm's length.
It is your view that the boundary revision does not result in any substantive change in property ownership and is not a disposition for tax purposes.
OUR VIEWS
In your letter you have outlined what appears to be an actual fact situation related either to a past transaction or to an actual proposed transaction. If the situation described relates to an actual transaction which has already been implemented, the review of such transactions falls within the responsibility of District Taxation Offices and it is the practice of this Department not to comment on such transactions when the identities of the taxpayers are not known. If, however, the situation described relates to an actual proposed transaction, it should be the subject of an advance income tax ruling. However, we can provide you with the following general comments which we hope will be of assistance to you.
"Disposition" of property as defined in part in subparagraph 54(c)(i) of the Income Tax Act (the "Act") includes "any transaction or event entitling a taxpayer to proceeds of disposition of property". Subparagraph 54(c)(v) of the Act clarifies by providing that generally one must look only at changes in beneficial ownership.
In the situation described by you there would be a disposition by AG and PF of their respective 3 acre parcels of land as there would be a change in the beneficial ownership of the respective 3 acre parcels of land. Interpretation Bulletin IT-490 outlines the Departments views of barter transactions. As the two parcels of land have the same fair market value that value would be the proceeds of disposition and the cost of acquistion for both AG and PF.
We trust our comments will be of assistance to you.
Yours truly,
R. Albert for Director Business and General Division Rulings Directorate Legislative and Intergovernmental Affairs Branch
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