1 October 2001 External T.I. 2001-0095565 - SIMILAR VEHICLE-DEF'N AUTO

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:

What is a "similar vehicle" for the purposes of the definition of automobile in subsection 248(1) of the Act.

Position:

The determination of whether a particular motor vehicle is a "similar vehicle" for the purposes of this definition is a question of fact. Such a determination can only be made taking into consideration factors such as the function and design of the motor vehicle. For example, the cargo capacity, both in terms of volume and weight, would be important in determining if the motor vehicle in question is indeed similar to a motor vehicle of a type commonly called a van or pick-up truck.

Reasons:

Definition of automobile in subsection 248(1) of the Act.

XXXXXXXXXX 2001-009556

Randy Hewlett, B.Comm.

October 1, 2001

Dear XXXXXXXXXX:

Re: "Similar Vehicle" - Definition of Automobile

We are writing in response to your letter dated June 4, 2001 to the Saskatoon Tax Services Office, wherein you requested our opinion on what constitutes a "similar vehicle" for the purposes of paragraph (e) of the definition of "automobile" in subsection 248(1) of the Income Tax Act (the Act).

Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R4, Advanced Income Tax Rulings, dated January 29, 2001. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. However, we are prepared to offer the following general comments.

Paragraph (e) of the definition of "automobile" in subsection 248(1) of the Act excludes a motor vehicle of a type commonly called a van or pick-up truck or a similar vehicle:

(1) that has a seating capacity for not more than the driver and two passengers and that, in the taxation year in which it is acquired, is used primarily for the transportation of goods or equipment in the course of gaining or producing income, or

(2) the use of which, in the taxation year in which it is acquired, is all or substantially all for the transportation of goods, equipment or passengers in the course of gaining or producing income.

The determination of whether a particular motor vehicle is a "similar vehicle" for the purposes of this definition can only be made after taking into consideration such factors as the function and design of the vehicle. For example, the cargo capacity would be important in determining if the motor vehicle in question is indeed similar to a motor vehicle of a "type commonly called a van or pick-up truck." In the past, the Canada Customs and Revenue Agency (CCRA) has stated that a mini-van is a similar vehicle owing not only to its likeness to a van, but the functions it can perform. As well, an extended cab truck is considered to be a similar vehicle because it performs the same functions of an ordinary pick-up truck and has a very similar design. However, the CCRA has also commented that a station wagon is not a similar vehicle because of its reduced cargo space and design. For the same reasons a coupe, sedan, sports, or luxury car is not a similar vehicle.

We trust our comments will be of assistance to you.

Yours truly,

John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch

.../cont'd