Subsection 20(1)

As a consequence of an amendment to the Forest Act (British Columbia) which gave holders of existing timber rights and privileges the entitlement to replace their existing rights with new timber licences governed by the new provisions of that Act, in 1979 the taxpayer exercised this right of replacement to obtain replacement licences that covered identical areas subject to the terms of the same tree farming licence. Desjardins found that as a result of this exchange, the taxpayer had acquired the replacement licences, with the result that it had not owned such licences without interruption from December 31, 1971 onwards.