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: Can farm land be a replacement property for a milk quota ?
Position: NO
Reasons: Eligible capital property must be replaced with eligible capital property
XXXXXXXXXX 981813
C. Tremblay
Attention: XXXXXXXXXX
September 2, 1998
Dear Sir:
Re: Subsection 14(6) and 14(7)of the Income Tax Act (the “Act”)
This is in reply to your letter of July 6, 1998, wherein you requested our opinion on whether a dairy farmer in Alberta can use the provisions of subsection 14(6) and 14(7) of the Act in a particular fact situation. You indicate that a dairy farmer sold a dairy quota (an eligible capital property) for an amount greater than the original purchase price and used the proceeds of the sale to purchase farm land in Alberta of the same value as the dairy quota to be used in his farming business.
Subsection 14(6) of the Act provides for an election allowing an income deferral, where a taxpayer disposes of an eligible capital property in a particular taxation year and acquires another eligible capital property as a replacement before the end of the year following the year of disposition. In your example, land, which is not an eligible capital property, will be acquired. Subsection 14(7) of the Act provides that a particular property is a replacement property if it is acquired for the same or similar use as the use to which the taxpayer put the former property. In our view, land would not be put to the same or similar use as a dairy quota. Therefore, the replacement property rules in subsection 14(6) and (7) of the Act will not apply.
We trust our comments are of assistance to you
Yours truly,
J. F. Oulton, CA
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
- 2 -
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1998
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1998
Email this Content