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.
Principal Issues:
Whether or not a non-resident who disposes of property which would qualify as his principal residence pursuant to section 54 can reduce the amount of the capital gain resulting on the disposition by virtue of the fact that the numerator in the formula provided for in 40(2)(b)(i) would equal 1 - even though he was never a resident in Canada during the time period in question.
Position TAKEN:
Yes.
Reasons FOR POSITION TAKEN:
Legislation. The "one" in the numerator stands alone and is separate from the phrase "the number of taxation years ending after the acquisition date...." found in 40(2)(b)(i).
950740
XXXXXXXXXX D. Zion
Attention: XXXXXXXXXX
April 11, 1995
Dear Sirs:
Re: Paragraph 40(2)(b) of the Income Tax Act (the "Act")
We are writing in response to your letter of March 9, 1995, in which you request our interpretation of the application of paragraph 40(2)(b) of the Act in the computation of a capital gain to a situation where a non-resident individual disposes of a principal residence.
As we understand the situation, a non-resident has disposed of a property which meets the definition of principal residence pursuant to section 54 of the Act. The non-resident was not resident in Canada at any time during which the property was owned. You are of the view that, on the assumption that the property meets the definition of a principal residence, the non-resident can reduce the amount of the capital gain which results on the disposition of the property pursuant to the principal residence exemption by virtue of the fact that the numerator in the formula as provided for in subparagraph 40(2)(b)(i) of the Act, would equal one.
We concur with your comments that, on the assumption that the property meets the definition of a principal residence pursuant to section 54 of the Act, the non-resident would be eligible to use the principal residence exemption in the manner described above.
We trust our comments will be of assistance to you.
Yours truly,
P.D. Fuoco
for Director
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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