8 February 2001 Ministerial Correspondence 2001-0066334 - NEW WALL - CAPITAL OR CURRENT EXPENSE

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.

February 8, 2001

XXXXXXXXXX

Dear XXXXXXXXXX:

The Honourable Martin Couchon, Minister of National Revenue, has asked me to respond to your letter addressed to the Honourable Paul Martin, Minister of Finance, concerning the tax treatment of expenditures incurred in respect of moisture-damaged condominium units. Mr. Martin sent a copy of your letter to Mr. Cauchon on January 10, 2001.

Unfortunately, the determination of whether or not a cost is of a capital nature that is to be added to the cost of a building cannot be determined on the basis set out in your letter. Although the Income Tax Act does not specifically define what constitutes a capital expenditure or a repair, the courts have identified certain factors which should be considered in making such a determination. I understand that Mr. Martin set out some of these factors in his letter to you. I am attaching a copy of Interpretation Bulletin IT-I 28R, Capital Cost Allowance - Depreciable Property, which provides additional information on these factors, to assist you in making this determination. If it is established that the cost of the new wall is of a capital nature, it must be added to the same class as the previous wall for capital cost allowance purposes, in accordance with the rules set out in the Act.

The Canada Customs and Revenue Agency (CCRA) does not have the authority to change income tax laws. The role of the CCRA is to administer and enforce the Act as passed by Parliament, and in accordance with relevant jurisprudence.

I trust my comments are of assistance.

		Yours sincerely,

		Bill McCloskey
		Assistant Commissioner
		Policy and Legislation Branch

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