1 November 2001 External T.I. 2001-0070595 - Transportation of Goods

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 CCRA.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.

Principal Issues: Whether electronic signals along transmission systems, e.g. fiber optic cable or coaxial cable constitute "transportation of goods" under paragraph 95(3)(a)

Position: No

Reasons: Signals are not "goods"

XXXXXXXXXX 	2001-007059
		Suzanie Chua
November 1, 2001

Dear XXXXXXXXXX:

Re: Paragraph 95(3)(a)

This is in reply to your letter requesting our interpretation of the words "transportation of...goods" in paragraph 95(3)(a) of the Income Tax Act (the "Act").

You asked whether the phrase "transportation of ...goods' includes the transmission of electronic signals along a transmission system e.g. fiber optic cable or coaxial cable located outside Canada. You stated that the word "transportation" has wide meaning and includes the act of conveying or process of being conveyed. You also stated that electronic signals are personalty as they are not real property. You cited Pepper v. MNR [1984] C.T.C. 2694, Canadian Wirevision Ltd. v. R. [1979] C.T.C. 122 in support of your argument and also say that paragraph 95(3)(a) is in any event ambiguous and any ambiguity should be resolved in favor of the taxpayer pursuant to the principle laid down in John-Manville Canada Inc. v. R. [1985] 2 S.C.R. 46.

Comments

The situation outlined in your letter appears to involve either actual proposed transactions or an existing business arrangement involving identifiable taxpayers. Confirmation as to the income tax consequences of proposed transactions will only be given in the context of an advance income tax ruling. The procedures for making a request for an advance income tax ruling are outlined in Information Circular 70-6R4, dated January 29, 2001, issued by the Canada Customs and Revenue Agency (the "CCRA"). If the arrangement described already exists, assistance in determining its Canadian tax results may be obtained from a tax services office of the CCRA. We can, however, offer the following general comments.

We do not agree that the phrase "transportation of ...goods" in subsection 95(3) of the Act includes the transmission of electronic signals along a transmission system e.g. fiber optic cable or coaxial cable because electronic signals are not goods. The Federal Court of Appeal in Canadian Wirevision made the distinction between electricity and electric currents or signals and that Court held that radio and television signals, while electric currents, are never referred to as goods. In our view, this decision has direct application to the hypothetical situation you described.

We trust these comments will be of assistance.

Yours truly,

for Director
International and Trusts Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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