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 27, 1980
CALGARY DISTRICT OFFICE W. Hume. Director-Taxation
HEAD OFFICE Corporate Rulings Directorate Lois C. Pollock 995-1787
W.M. Quinnell Audit Review
Proposed Reassessment T2 - 1977 (Jan. 31/77)
XXXX
This is in reply to your memorandum of July 14, 1980 in which you request our opinion as to whether section 44 "replacement property" refers to land for land and building for building,. etc.
Per page nine of your T20 Report, the deemed date of disposition in this case is April 6, 1976. The proposed subsection 44(6), (subsection 16(3) of the Draft Amendments to the Income Tax Act related to the Notice of Ways and Means Motion tabled in the House of Commons on April 21, 1980) which will permit the capital gain on land to be deferred against the cost of a replacement property which is a building, and vice versa, is to be applicable to dispositions after March 31, 1977 only.
Accordingly, the comments in IT-259 , paragraph 7 are applicable in this case and we agree with your proposal to reassess on the basis that the capital gain on the land cannot be deferred against the cost of the replacement building.
We note that the taxpayer's representative believes that the reference to replacement property in section 44 can reasonably be interpreted to mean the total property replacing the total expropriated property and they believe that to be the intent of the provision. We agree with these views with respect to the legislation as it presently reads in application to dispositions after March 31, 1977. However, we do not think the same can be said of the legislation as it applied to dispositions before April 1, 1977; the fact that the proposed subsection 44(6) is to apply only to dispositions after March 31, 1977 would seem to support this view. Accordingly, we do not agree with the taxpayer representative's suggestion that a remission under section 17 of the Financial Administration Act would be examined if we conclude that the reassessment is required under a correct interpretation of the law.
Your T20 Report is returned herewith and please accept our apologies for the long delay in replying.
Chief Services, Public Utilities & Exempt Corporations Section Corporate Rulings Directorate Legislation Branch
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