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: 1 - Can the location where a golf course is being built qualify as a "special work site" for purposes of subsection 6(6) of the Income Tax Act?
2 - Is the activity of building a golf course (other than the buildings relating to such a course) a construction activity for purposes of section 122.3 of the Act?
Position: 1 - Yes
2 - Likely will qualify.
Reasons: 1 - The only requirement for a location to be a "special work site" is that the location must be one at which the duties performed by a taxpayer were of a temporary nature.
2 - We have accepted (see Technical News No. 20) that the building of a golf course is "surface construction" for purposes of capital cost allowance.
XXXXXXXXXX 2001-010618
J. E. Grisé
December 24, 2001
Dear XXXXXXXXXX:
Re: Golf Courses
This is in reply to your letter of October 4, 2001, requesting our interpretation of subsections 6(6) and 122.3(1) of the Income Tax Act (the Act) with respect to the building of golf courses.
The particular circumstances in your letter on which you have asked for our views appear to be a factual situation involving a specific taxpayer. As explained in Information Circular 70-6R4, it is not this Directorate's practice to comment on proposed transactions involving specific taxpayers other than in the form of an advance income tax ruling. Should your situation involve a specific taxpayer and a completed transaction, you should submit all relevant facts and documentation to the appropriate tax services office for their views. However, we are prepared to offer the following general comments that may be of assistance.
Subparagraph 6(6)(a)(i) of the Act describes a "special work site" as "being a location at which the duties performed by the taxpayer were a of a temporary nature." A location where a golf course is being built or renovated could be a "special work site" to a particular employee. Please refer to the discussion in paragraphs 5 and 6 of Interpretation Bulletin IT-91R4, Employment at Special Work Sites or Remote Work Locations, on our understanding of "duties of a temporary nature". The bulletin also discusses the other requirements of subsection 6(6) of the Act that would need to be met prior to an employee being entitled to exclude from employment income certain allowances received for board and lodging and certain transportation allowances.
Your other concern is in respect to the possible application of section 122.3 of the Act to a person employed by a taxable Canadian corporation (the corporation) involved in the building of golf courses by the carrying out and management of the actual building of the golf course. The corporation's specific activities could include the surveying of the site as well as its clearing (including dynamiting where necessary and the uprooting of trees), the moving of earth, the levelling and shaping of the ground to reach the desired lay outs in the fairways and the greens, the installation of sprinklers, the selection of top soil and the grass as well as the landscaping. The company would not be involved in the construction of any the buildings usually used as golf course facilities, except for the pump house. In our view, these activities would be considered "construction" for the purposes of clause 122.3(1)(b)(i)(B) of the Act.
The corporation's involvement in a renovation project would differ from one project to the other, but, generally would be the same type of activity described above but in a more restricted scale. A renovation project could also be considered "construction" for purposes of clause 122.3(1)(b)(i)(B) of the Act providing there is a substantial change to the part of the golf course being renovated. The activities relating to a contract for the upkeep or maintenance of a golf course would not qualify as construction.
Whether or not a particular employee would qualify for the deduction from tax payable pursuant to section 122.3 of the Act on a construction activity undertaken outside of Canada by the corporation would depend on the facts relating to each employee. For details on this matter, please refer to the discussion on section 122.3 of the Act in Interpretation Bulleting IT-497R3, Overseas Employment Tax Credit.
We hope our comments are helpful.
John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
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