CRA does not accommodate pad sales by real estate pension corps

A s. 149(1)(o.2)(ii) pension corporation is required to limit its real estate activities to "acquiring, holding, maintaining, improving, leasing or managing capital property that is real property" of the corporation.

Where the pension corporation acquires a single parcel to develop as a shopping centre but severs and sells off a small portion that represents excess land, CRA quite predictably considers that it would be a question of fact whether the excess land was acquired as capital property.  (The problem is that appreciation by the time the severance is obtained may be anticipated.)  Finance accommodated the similar issue of pad sales by REIT subsidiaries by providing the new rules on "eligible resale properties."

Neal Armstrong.  Summary of 5 March 2014 T.I. 2013-0490641E5 under s. 149(1)(o.2).