16 February 1999 External T.I. 9900485 - REPLACEMENT PROPERTIES

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: What are the dates for purchasing replacement properties in the two scenarios submitted

Position: The end of the first taxation year following the taxation year in which the former business property was disposed of.

Reasons: Paragraph 44 (1)(d)

XXXXXXXXXX 990048
J. E. Grisé
February 16 1999

Dear XXXXXXXXXX:

Re: Replacement Properties

This is in reply to your letter of January 6, 1999 requesting the date a replacement property would have to be purchased in order to defer all or part of a capital gain in respect of the disposition a property that was immediately before the disposition a former business property.

The first former business property is disposed of on April 30, 1998 by a corporation with a fiscal period ending November 30, 1998. The second business property is also disposed of on April 30, 1998 but by a corporation with a fiscal period ending March 31, 1999.

In order to defer all or part of the capital gain from the disposition of the first former business property, the replacement property would have to be purchased before the end of November 30, 1999. The replacement property for the second former business property would have to be purchased before the end of March 31, 2000. In order to have the replacement property rules apply, a valid election must be made. In this respect, please refer to paragraph 7 of the attached Interpretation Bulletin IT-259R3 Exchanges of Property.

Please note paragraph 3 of IT-259R3 with respect to the reporting of a capital gain in the year of disposition of a former business property, when the replacement property is purchased in the subsequent year.

We hope our comments are helpful but since they do not constitute an advance income tax ruling, are not binding on the Department with respect to any particular business transaction.

Yours truly,

J.F. Oulton, CA
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch

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