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 Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
972995
XXXXXXXXXX B. Kerr
April 15, 1998
Dear Sirs:
Re: Replacement Trees
This is in response to your letters of November 11 and 14, 1997, concerning the deductibility of the cost of planting fruit trees.
The situation described in your letter involves a farmer that is considering replacing a portion of an existing orchard with a different variety of fruit tree. You have requested our views on whether the cost of the replacement trees would be deductible as a current expense. You have also asked whether our views would be the same if the farmland was leased by the farmer.
It is the Department’s view that the cost of perennial plants, orchard trees and nut trees purchased would, on the initial establishment of an orchard, be considered to be capital expenditures that would be added to the cost of farmland. The cost of replacement plants and trees would be considered deductible expenses. However, changing from one type of fruit to another would not in our view be a replacement. In our view, the cost of such new trees would still be regarded as capital in nature and therefore added to the cost of the farmland. As regards leased farmland, our views would be the same.
We trust that these comments will be of assistance.
Yours truly,
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1998
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1998