11 December 1997 Internal T.I. 9730697 - ITC

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.

Principal Issues: do bulk milk trucks qualify for ITC?

Position:Yes

Reasons:part of M&P

							      December 11, 1997

	Charlottetown Tax Services Office	 Partnerships, Trusts and
	Client Services	 Resources Division
S. Tevlin
	Attention:  Sharon Bulger
	 973069

We are writing in response to a letter which you forwarded to us on November 19,1997 from XXXXXXXXXX concerning an investment tax credit ("ITC") for milk hauling trucks used to pick up raw milk from the producer's farm and transport it to the dairy.

In order to qualify for ITC a property must be acquired by the taxpayer in the year and be a "qualified property", within the meaning assigned by the definition of that term under subsections 127(9), and (11) of the Income Tax Act (the "Act").

Qualified property is defined in subsection 127(9) of the Act as property that is to be used by the taxpayer in Canada primarily for the purpose, of manufacturing or processing goods for sale or lease.

For purposes of determining Canadian manufacturing and processing profits the definition of "qualified activities" in Regulation 5202 of the Income Tax Act Regulations includes, inter alia, the "receiving and storage of raw materials".

Therefore, provided the dairy operation can be considered to be the manufacturing or processing of goods for sale or lease then it is our opinion that the milk hauling trucks can be considered a qualified property for purposes of an ITC.

We trust our comments will be of assistance to you in responding to XXXXXXXXXX.

Yours truly

for Director
Resources, Partnerships and Trusts Division
Income tax Rulings and Interpretations Directorate
Policy and Legislation Branch