| 923163 | |
| XXXXXXXXXX | Glen Thornley |
| (613) 957-2101 |
Attention: XXXXXXXXXX
January 18, 1993
Dear Sirs:
Re: XXXXXXXXXX
This is in reply to your letter of October 20, 1992 requesting an advance income tax ruling on behalf of XXXXXXXXXX, and further to our telephone conversation (Thornley\XXXXXXXXXX) of November 9, 1992 concerning the ruling request and other related issues.
As discussed, we are of the view that the "XXXXXXXXXX" do not meet the description in subparagraph 149(5)(e)(i) of "property used exclusively for and directly in the course of providing the dining, recreational or sporting facilities provided by it for its members."
Additionally, your ruling request contains alternative courses of action, the time frame is indefinite and satisfactory evidence of the proposed transaction is lacking. As indicated in the Information Circular the foregoing circumstances and the lack of relevant documents are reasons for not providing an advance income tax ruling.
In view of the foregoing, you are withdrawing your ruling request but would appreciate our views on the replacement property rules relative to the proposed negotiated purchase of the XXXXXXXXXX. As stated during our telephone conversation we are unable to comment directly on the facts of your situation as a possible proposed transaction may be involved, however we do provide the following general comments.
Our Comments
In order for the provisions in section 44 to be applied the former property must either be under expropriation or be a "former business property" as defined in section 248 of the Income Tax Act. A former business property of a taxpayer means a capital property of the taxpayer that "was used by the taxpayer...primarily for the purpose of gaining or producing income from a business". In our view land held for development since XXXXXXXXXX upon which financial projections were prepared and bank financing obtained would not meet the description of "former business property" as the land has never been used by the taxpayer to earn income.
We regret being unable to provide more favourable comments. Your deposit in the amount of $400.00 will be returned shortly.
Yours truly,
E. Wheelerfor DirectorBusiness and General DivisionRulings DirectorateLegislative and IntergovernmentalAffairs Branch