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.
April 24, 2001
XXXXXXXXXX
Dear XXXXXXXXXX:
Thank you for your letter of March 8, 2001, on behalf of a constituent who is concerned about the tax treatment of expenditures incurred in respect of moisture-damaged condominium units.
When a condominium is rented and expenses of a current nature are incurred in connection with the rental property, they are generally fully deductible from gross rental income for the particular year, subject to certain restrictions. On the other hand, capital expenditures on depreciable property are added to the capital cost of the property. The Income Tax Act generally allows a deduction in computing rental income in respect of this capital cost that is similar to depreciation and is referred to as capital cost allowance. Accordingly, the Act essentially sets out the annual rate at which the capital cost may be deducted.
Although the Act does not specifically define what constitutes a capital expenditure or a repair of a current nature, the courts have identified certain factors to consider when making such a determination. To assist your constituent, I am enclosing a copy of Interpretation Bulletin IT-128R, Capital Cost Allowance - Depreciable Property, which sets out these factors. Nevertheless, the determination requires that all the relevant facts of each particular situation be reviewed and, therefore, we cannot provide a general statement that would apply to all situations.
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 regret that my reply cannot be more definitive, however, I trust my comments are of assistance.
Yours sincerely,
Martin Cauchon
Attachment
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