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 an extended cab pick-up truck is excluded from the definition of automobile in subsection 248(1) by virtue of:
Paragraph (a) - if it is not considered a motor vehicle designed or adapted primarily to carry individuals on highways and streets; or
Subparagraph (e)(ii) - if it used all or substantially all for the transportation of goods, equipment or passengers in the course of gaining or producing income.
Position: Paragraph (a) - No. Subparagraph (e)(ii) - Yes.
Reasons: Paragraph (a) - Pick-up trucks in general have been designed primarily to carry individuals on highways and streets. Further, when the definition of automobile is read in total context, it is reasonable to conclude that motor vehicles specifically described in the provisions enumerated after the phrase "but does not include", are included under paragraph (a) of the definition.
Subparagraph (e)(ii) - in the taxation year in which it was acquired, the extended cab pick-up truck was used all or substantially all for the transportation of goods, equipment or passengers in the course of gaining or producing income.
February 28, 2003
Owen W. Newell, CGA HEADQUARTERS
Manager Randy Hewlett, B.Comm.
General Operations Unit 613-957-8973
Excise and GST/HST Rulings Directorate
Attention: Douglas Wood
2003-000169
Definition of Automobile - Subsection 248(1) of the Income Tax Act (the ITA)
This is in reply to your e-mail of February 6, 2003, wherein you asked for our comments on a referral to you from the XXXXXXXXXX Tax Services Office (the TSO) concerning the above-noted issue.
Issue
The TSO is reviewing a ruling request from a taxpayer to determine whether an "extended cab pick-up truck" is an automobile for purposes of the Excise Tax Act (the ETA). An automobile for purposes of the ETA is defined in subsection 248(1) of the ITA. The issue is whether the extended cab pick-up truck is excluded from the definition of automobile in subsection 248(1) of the ITA by virtue of:
? Paragraph (a), if it is not considered to be a motor vehicle designed or adapted primarily to carry individuals on highways and streets; or
? Subparagraph (e)(ii), if it is used all or substantially all for the transportation of goods, equipment or passengers in the course of gaining or producing income.
Facts
Our understanding of the facts is as follows:
? The taxpayer purchased a XXXXXXXXXX on XXXXXXXXXX for use in a ranching business. The vehicle is a 1-ton crew cab pick-up truck with dual wheels and four-wheel drive. It is capable of hauling 15,000 pounds of cargo. The purchase price was $XXXXXXXXXX, including GST of $XXXXXXXXXX.
? Since the time of acquisition of the pick-up truck, the taxpayer has used it all or substantially all of the time to transport goods, equipment or passengers in the course of gaining or producing income from the ranching business.
? The taxpayer selected a pick-up truck with a crew cab because he has XXXXXXXXXX small children. Due to the remoteness of the ranch he does not have access to childcare and must take the children with him while he and his spouse are working around the ranch.
? The taxpayer has another vehicle outside of the ranching business that is used for personal purposes.
TSO's Position
The TSO is of the view that the extended cab pick-up truck is not an automobile for either of two reasons:
? It is excluded because of paragraph (a) of the definition, since it is not a motor vehicle designed or adapted primarily to carry individuals on highways and streets, that is, it is designed primarily to haul goods; or
? It is excluded because of subparagraph (e)(ii) of the definition, since, in the year it was acquired, it has been used all or substantially all of the time to transport goods, equipment or passengers in the course of gaining or producing income.
In support of its view regarding paragraph (a), the TSO cites the Tax Court of Canada (the TCC) decision in Wayne Ruhl v. Her Majesty the Queen (98 GTC 2055).
Subsection 248(1) of the Act defines an "automobile" as:
(a) a motor vehicle that is designed or adapted primarily to carry individuals on highways and streets and that has a seating capacity for not more than the driver and 8 passengers,
but does not include
(b) an ambulance,
(c) a motor vehicle acquired primarily for use as a taxi, a bus ...
(d) except for the purposes of section 6, a motor vehicle acquired to be sold, rented or leased ...
(e) a motor vehicle of a type commonly called a van or pick-up truck or a similar vehicle
(i) that has a seating capacity for not more than the driver and 2 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
(ii) 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.
In our opinion, an extended cab pick-up truck meets the requirements in paragraph (a) of the definition of automobile. We feel it is reasonable to conclude that pick-up trucks, particularly those that have extra passenger capacity, have generally been designed primarily to carry individuals on highways and streets. Further, we are also of the view that when the definition of automobile is read in total context, it is reasonable to conclude that motor vehicles specifically described in paragraphs (b) to (e) are otherwise included in the definition under paragraph (a). In this particular situation, we are of the view that the extended cab pick-up meets the requirements in paragraph (a), but is excluded from the definition by virtue of subparagraph (e)(ii), since in the taxation year in which it was acquired, it was used all or substantially all for the transportation of goods, equipment or passengers in the course of gaining or producing income.
The TCC decision in Ruhl concerned whether a 1995 Ford F-250 3/4 ton truck was an automobile under subsection 248(1) of the ITA. The TCC's conclusion was based on the finding of fact that the truck was used "to transport goods and equipment ... substantially all of the time" and therefore, is not an automobile by virtue of the exclusion in subparagraph (e)(ii). However, in our view, the TCC's other comment that the truck could also be excluded by virtue of paragraph (a) because it "was not designed or adapted primarily to carry individuals on highways and streets", has no precedential value.1
You may also wish to note that the 2003 Budget announced an amendment to the definition of automobile with respect to extended cab pick-up trucks. For taxation years that begin after 2002, an extended cab pick-up truck will be excluded from the definition of automobile if it is used primarily for the transportation of goods, equipment or passengers in the course of earning or producing income at one or more worksites that is at least 30 kilometres from the nearest urban community having a population of at least 40,000 persons. In our view, this amendment further supports the interpretation that it is reasonable to conclude that motor vehicles specifically described in paragraphs (b) to (e) are otherwise included in the definition of automobile under paragraph (a).
We trust our comments will be of assistance.
John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch
I
ENDNOTES
1 This case was heard under the informal procedure and in accordance with section 18.28 of the Tax Court of Canada Act, has no precedential value.
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