Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues: Whether the GST input tax credit has to be deducted from the underpreciated capital cost ("UCC") of a class 10.1 asset when received, where the business-use of the vehicle is 100%.
Position: Yes.
Reasons: Subsection 13(7.1) of the Act provides generally that the capital cost of a depreciable property is reduced by the amount of government assistance received in respect of the acquisition of the depreciable property.
XXXXXXXXXX 2002-012645
J. Gibbons, CGA
March 22, 2002
Dear XXXXXXXXXX:
We are replying to your facsimile dated March 3, 2002, in which you enquired whether the GST input tax credit has to be deducted from the underpreciated capital cost ("UCC") of a class 10.1 asset when received. You indicated that business-use of the vehicle is 100% and the amount being depreciated is $30,000 plus the applicable GST and PST.
As requested, we have considered your enquiry and have provided our views. However, our comments are of a general nature only since we cannot confirm the tax implications of particular transactions unless the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R4.
Subsection 13(7.1) of the Income Tax Act (the "Act") provides generally that the capital cost of a depreciable property is reduced by the amount of government assistance received in respect of the acquisition of the depreciable property. Accordingly, the capital cost of depreciable property must be reduced by the GST input tax credit received in respect of such property. This is explained on page 33 of the 2000 "Business and Professional" income tax guide. In the case of a class 10.1 property, the capital cost to the taxpayer would be the amount determined under paragraph 13(7)(g) of the Act, i.e., $30,000 plus the GST and PST that would be payable on $30,000, less the actual GST input tax credit received.
We trust that these comments will be of assistance.
Yours truly,
John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
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