The owner of a farm house purported to make the s. 45(3) election when she moved into a nursing residence. CRA stated:
Subparagraph 45(1)(a)(ii) provides that there is a disposition at FMV where a property, acquired for the purpose of earning income, is subsequently used for another purpose (for example, as a taxpayer's residence). This deemed disposition may therefore give rise to a taxable capital gain unless the taxpayer has elected under subsection 45(3) to avoid this deemed disposition. The subsection 45(3) election is therefore limited to deferring the capital gain accrued during the period where the property was used to earn income.
In this case, since the facts do not show that there was a change of use, that election could not be made.