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:
Can it be said that security equipment that is installed in a building due to nature of business operated in the building is class 8 equipment rather than class 1.
Position: No.
Reasons:
In order to be in class 8 the property must be described in paragraph (b) .
2000-001973
XXXXXXXXXX S. Tevlin
(613) 957-2093
Attention: XXXXXXXXXX
July 26, 2000
Dear Sir:
Re: Classification of Security Equipment
We are writing in response to your letter dated March 28, 2000 wherein you requested our comments regarding the proper classification of security equipment such as monitors, camera's, card readers etc. in Schedule II to the Income Tax Regulations. In particular you describe a situation where such equipment is installed to protect "security sensitive" business conducted within the building.
Paragraph 18 of Interpretation Bulletin IT-79R3 states that, "(P)roperty that is attached to a building however firmly, is included in class 8 if is acquired exclusively for those purposes stated in class 8". It is our opinion that a situation could arise where a property could fall into class 1 and class 8 of Schedule II of the Regulations, but only if the property is specifically described in class 8 (except paragraph (i) thereof).
It is our opinion that the security equipment described above is not property described in paragraph (b) of class 8 that being property that is attached to a building and that was acquired solely for the purpose of "servicing, supporting, or providing access to or egress from, machinery or equipment". Nor is it tangible property acquired solely for the purpose of "manufacturing or processing". As such we would expect such property to be included as a component part of the building in class 1.
The foregoing comments are given in accordance with the practice referred to in paragraph 21 of IC-70-6R3, and are not binding on the Canada Customs and Revenue Agency.
We trust our comments will be of assistance to you.
Yours truly,
Paul Lynch
for Director
Resources, Partnerships and Trusts Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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