Suncor acquired a Class 41 property in January 2005, then on January 1, 2006 transferred it on a s. 97(2) rollover basis to a limited partnership (the “LP”) of which it was the 99.9% general partner and whose first taxation year extended from February 1, 2005 to January 31, 2006 and second taxation year ended on January 31, 2007 (the “2007 taxation year”). S. 13(31)(a) deemed the LP to have acquired the property for purposes of s. 13(27)(b) at the time of its acquisition by Suncor, i.e., in January 2005. The LP claimed CCA in its 2007 taxation year on the basis that s. 13(31)(a) deemed it to have acquired the property on the first day of that taxation year, i.e., it was effectively deemed by s. 13(31)(a) to have a notional taxation year beginning on February 1, 2004 and ending on January 31, 2005, so that on the beginning of its 2007 taxation year it satisfied the test in s. 13(27)(b) that such time followed the end of a taxation year of more than 357 days which, in turn, followed the taxation year in which the taxpayer had acquired the property.
In rejecting this position, so that the LP could not claim CCA on the property in its 2007 taxation year, D’Arcy J stated (at paras. 61, 68-69):
Subsection 13(31) deems an acquisition of property to occur on a different day than the day that the property was actually acquired. However, that is all it does … .
There is nothing in the wording of subsection 13(31) that creates the fiction of the Limited Partnership having a year-end prior to February 1, 2005 … .
[T]he Appellant’s position defeats the purpose of the two-year rolling start rule by shortening the length of time that the Limited Partnership is required to have held the property to one completed taxation year.