Principal Issues: Whether for purposes of classifying a truck in Class 16 of Schedule II of the Income Tax Regulations (the Regulations), it has to be used in a business that hauls freight on a for hire basis on behalf of third parties.
Position: Generally, paragraph (g) of Class 16 applies to large trucks and tractors that are primarily used by taxpayers involved in the trucking sector for hauling freight. However, there may be situations where a taxpayer is in another type of business that hauls its own freight and the truck or tractor would qualify for Class 16 treatment.
Reasons: Paragraph (g) was added to Class 16 in response to concerns from taxpayers in the trucking sector that the CCA rates on large trucks and tractors used in freight hauling were too low. In a situation where a taxpayer's business hauls its own freight, a reasonable interpretation of paragraph (g) of Class 16 is that the taxpayer is in a "business that includes hauling freight", provided the hauling of its own freight is integral to the business of the taxpayer (e.g. where a manufacturer transports its products to market), and the truck or tractor is the type primarily used by taxpayers involved in the trucking sector for hauling freight. If the other conditions outlined in paragraph (g) are met, the truck or tractor would qualify for Class 16 treatment.