CRA considers that a s. 16.1 election does not cause a leased property to be a capital property

The operation of the ETA input tax credit rules can turn on whether the registrant is considered to have acquired a “capital property,” largely as defined for ITA purposes. CRA considers that a leased property for which an ITA s. 16.1 election has been made is effectively deemed to be a depreciable property for CCA purposes, but is not deemed to be generally a capital property, so that the leased property also is not a capital property for ETA purposes.

CRA noted the general principle in this regard that generally a registrant is not considered to have acquired property for ITC purposes unless ownership of the property has been transferred to it.

Neal Armstrong. Summaries of 13 December 2017 Interpretation 187306 under ETA s. 225.1(2) – B and s. 169(1).