| 19(1) | File No. 5-9447 |
| M. Eisner | |
| (613) 957-2138 | |
| June 26, 1990 |
Dear Sir:
This is in reply to your letter of January 16, 1990 concerning whether a property can be regarded as a "replacement property" for the purposes of subsection 44(5) of the Income Tax Act even though it is located outside Canada. We apologize for the delay in replying.
You have provided us with the following situation:
24(1)
From the information you have supplied, it would appear that you are describing a proposed transaction involving a specific taxpayer which according to Information Circular 70-6R, would more appropriately be the subject of an advance income tax ruling. We are, however prepared to offer the following general comments.
In our view, a property, which is situated outside Canada, will qualify as a replacement property pursuant to subsection 44(5) provided it satisfies all the requirements therein. However, we also note that Department of Finance Release No. 90-041 indicates that amendments will be proposed which will restrict the benefit of the replacement property that is located in Canada. The proposed current amendments will be effective in respect of the replacement properties for former properties disposed of after April 2, 1990, other than those disposed of by a taxpayer pursuant to an agreement in writing entered into on or before April 2, 1990.
These comments represent our opinion of the law as it applies generally. As indicated in paragraph 24 of Information Circular 70-6R dated December 18, 1978, this opinion is not a ruling and accordingly, it is not binding on Revenue Canada, Taxation.
We trust the foregoing comments will be of assistance to you.
Yours truly,
for DirectorBusiness and General DivisionSpecialty Rulings DirectorateLegislative and Intergovernmental Affairs Branch