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.
950614
XXXXXXXXXX Olli Laurikainen
(613) 957-2116
Attention: XXXXXXXXXX
April 24, 1995
Dear Sirs:
Re: Property Acquired Under Restitution Process
This is in response to your letter dated February 28, 1995 wherein you requested our views concerning the determination of the adjusted cost base of property acquired by a Canadian resident from the former Czechoslovakian Republic under a restitution process whereby control of property previously seized under a communist government is being returned to its previous owners. In addition, you question whether any rollover provision similar to section 85 of the Income Tax Act (the "Act") is available if such property were subsequently transferred to a corporation resident in the Czech Federal Republic.
Since we have not reviewed the legislation under which the restitution process takes place, we are unable to provide a definitive answer. However, provided the taxpayer did not have the rights associated with the ownership (i.e. beneficial ownership) of a property located in the former Czechoslovakian Republic until the control of the property was returned to the taxpayer under the restitution process, it is our view that the ACB of the property to such taxpayer for the purposes of the Act would be its fair market value at the date both beneficial ownership and legal ownership are acquired under such process. Any appreciation in the value of the property attributable to the period prior to such date would not be taxable under the Act since such amount would meet the criteria to be considered a windfall. In the event the property is subsequently transferred to a corporation resident in the Czech Federal Republic, no rollover is available for the purposes of the Act. Therefore, to the extent the fair market value of the property at the time of the transfer exceeds its ACB, a gain would be realized for the purposes of the Act.
We trust this is the information you require.
for Director
Reorganizations and Foreign Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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© Her Majesty the Queen in Right of Canada, 1995
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© Sa Majesté la Reine du Chef du Canada, 1995
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