A manufacturer, which wishes to expand its operations, acquires a piece of vacant land and takes three years to build a new plant. It then moves its operations to the new property, and eight months later, sells the former property. Can a property acquired in advance of the disposition of the former property qualify as a replacement property?
CRA responded that even though the property is purchased under a business expansion, this will not, in itself, prevent it from being considered a replacement property; and that there is no requirement that the replacement property be acquired after the former property is disposed of – so that the acquisition of the new property in advance of the disposition of the former property would not prevent it from being a replacement property.