11 May 2004 External T.I. 2004-0064541E5 - Automobile - Meaning of Goods or Equipment

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.

Principal Issues: For the purpose of paragraph (e) in the definition of automobile in subsection 248(1) of the Act, does "goods or equipment" mean tools?

Position: Goods or equipment can include tools. General comments provided.

Reasons: Whether or not a particular truck is an automobile for purposes of the definition is a question of fact.

XXXXXXXXXX T. Young, CA
2004-006454
May 11, 2004

Dear XXXXXXXXXX:

Re: Definition of Automobile - Meaning of "Goods or Equipment"

We are writing in response to your email of February 27, 2004, concerning the above-noted subject.

Excluded from the definition of automobile in subsection 248(1) of the Income Tax Act are certain motor vehicles that are used to transport goods or equipment in the course of gaining or producing income. For example, subparagraph (e)(i) of the definition excludes:

(e) a motor vehicle

(i) of a type commonly called a van or pick-up truck, or a similar vehicle, 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 or leased, is used primarily for the transportation of goods or equipment in the course of gaining or producing income.

You asked for our views on whether a truck that is "used primarily to transport tools of the trade to various job sites" is considered to be transporting "goods or equipment" for purposes of this provision.

Our Comments

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 ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002, which can be found on our web site at www.cra.gc.ca. However, we are prepared to provide the following general comments, which may be of assistance to you.

In our view, the "transportation of goods or equipment" would generally include the transportation of tools to or from a job site. However, in determining if a motor vehicle is primarily being used "for the transportation of goods or equipment in the course of gaining or producing income", all of the facts would have to be reviewed.

We trust our comments will be of assistance to you.

Yours truly,

Randy Hewlett, B. Comm.

for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Planning Branch