Translation disclaimer
This translation was prepared by Tax Interpretations Inc. The CRA did not issue this document in the language in which it now appears, and is not responsible for any errors in its translation that might impact a reader’s understanding of it or the position(s) taken therein. See also the general Disclaimer below.
Principal Issues: [TaxInterpretations translation]
Would a motor vehicle that is repainted or cosmetically modified on the basis of advertising concepts and that is driven for advertising purposes be a passenger vehicle, as defined in subsection 248(1) of the Act? If so, would such a pick-up, van or similar vehicle be a passenger vehicle?
Position:
If the motor vehicle is designed primarily to carry individuals on highways and streets, and has a seating capacity for not more than nine including the driver, and does not fall within the exceptions mentioned in paragraphs (a) to (d) of the definition of "automobile", the motor vehicle would be a passenger vehicle, regardless of its use.
According to the facts mentioned in the letter, the pick-up, van or similar type of motor vehicle would not meet the use criterion found in paragraph (d) of the definition of the word "automobile" in order to be excluded from this definition and would therefore be a passenger vehicle.
Reasons:
According to the definition of "automobile" in subsection 248(1), one of the criteria used to determine whether a motor vehicle meets the definition is that it is designed to carry individuals on highways and streets, which has no connection with its use.
With regard to the pick-up or van type motor vehicle, we are of the view that the simple fact of operating a motor vehicle that has been repainted and cosmetically modified on the basis of advertising concepts does not constitute the transportation of goods or equipment. Furthermore, the letter states that the advertising material is the motor vehicle. We are of the view that the goods or equipment to be transported by the motor vehicle, for the purposes of the use test set out in paragraph (d) of the definition of "automobile", must be distinct from the motor vehicle itself.
XXXXXXXXXX Sylvie Labarre, CA
2001-009266
January 18, 2002
Dear Sir,
Subject: Passenger vehicle
This is further to your letter of July 11, 2001 in which you requested our opinion as to the applicability of the definition of "passenger vehicle" in subsection 248(1) of the Income Tax Act (the "Act") in a particular situation. We apologize for the delay in responding to this request.
Facts
Motor vehicles were acquired by a company involved in advertising.
Those motor vehicles were partially or totally repainted or otherwise aesthetically modified on the basis of advertising concepts provided by the advertising firm to its clients.
The services offered by the advertising firm consisted not only of the foregoing but also of broadcasting advertisements by means of vehicle traffic in various busy public places in order to promote the sale of products distributed by its clients.
The advertising firm billed its clients for the services offered through the use of its advertising material, i.e., motor vehicles.
The motor vehicles were therefore used solely for advertising purposes and in no way for personal use by employees or representatives of the advertising firm.
Questions
You wish to know whether the motor vehicles described above constituted passenger vehicles within the meaning of subsection 248(1) of the Act.
If so, you wish to know whether our answer would be the same if the motor vehicles were pick-up trucks, vans or similar vehicles.
Our Comments
As stated in paragraph 22 of Information Circular 70-6R4 dated January 29, 2001, it is the practice of the Canada Customs and Revenue Agency (CCRA) not to issue written opinions regarding proposed transactions otherwise than by way of advance income tax rulings. Furthermore, when it comes to whether a completed transaction has received appropriate tax treatment, that determination rests first with our Tax Services Offices following their review of all facts and documents, which is usually performed as part of an audit engagement. However, we can offer the following general comments that we hope may be helpful to you. These comments may not, however, apply to your particular situation in certain circumstances.
As you stated in your letter, motor vehicles acquired after June 17, 1987 are passenger vehicles, as defined in subsection 248(1), if they satisfy the definition of "automobile" also found in subsection 248(1).
Subject to the exceptions referred to in paragraphs (a) to (e) of the definition of "automobile", an automobile for the purposes of the Act is a motor vehicle designed or adapted primarily to transport individuals on highways and streets and having a maximum seating capacity of nine, including the driver's seat.
In order to determine whether the motor vehicles described in the facts are automobiles for the purposes of the Act, we must look at the design of these motor vehicles and not at their use. If the motor vehicles described in the facts are designed primarily to transport individuals on highways and streets, those motor vehicles are "automobiles" and "passenger vehicles", as defined in subsection 248(1), if the seating capacity does not exceed nine and if the exceptions set out in paragraphs (a) to (e) of the definition of "automobile" do not apply. This is the case even if the motor vehicles are not used for such transportation or even if they have been modified.
Where motor vehicles are not designed for the transportation of individuals on highways and streets, they may still be automobiles for the purposes of the Act if they are equipped for such transportation. Whether motor vehicles are equipped for such transportation is a question of fact. Motor vehicles could be equipped to transport individuals on highways and streets even if they are not used for such transportation.
In response to your second question, we are of the view that if the motor vehicle described in the facts were a pick-up truck, van or similar type, it would not satisfy the exception provided for in paragraph (e) of the definition of "automobile" because it would not satisfy the test of being used to transport goods, equipment or passengers for the purpose of earning income.
In fact, it is our opinion that the simple fact of operating a motor vehicle that has been repainted and cosmetically modified on the basis of advertising concepts does not constitute the transportation of goods or equipment. You state in your letter that the advertising material is the motor vehicle. We are of the view that the goods or equipment to be transported by the motor vehicle, for the purposes of the use test in paragraph (e) of the definition of the word "automobile", must be distinct from the motor vehicle itself.
Consequently, the motor vehicle described in the facts would be an "automobile" and a "passenger vehicle", as defined in subsection 248(1) of the Act, even if it were a pick-up truck, van or similar type of vehicle.
These comments are not advance income tax rulings and are not binding on the CCRA.
Best regards,
Ghislaine Landry, CGA
Manager
Individuals, Business
and Partnerships Section
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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