28 June 2005 External T.I. 2005-0122211E5 - CCA On A Vehicle In The Spouse's Name

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: Whether Mr. X, the beneficial but not legal owner, may claim CCA on a vehicle.

Position: Question of fact, but likely yes.

Reasons: If Mr. X has full possession and unrestricted use of the vehicle and pays all of the relevant expenses, he would be entitled to claim CCA for the business use of the vehicle.

June 28, 2005

XXXXXXXXXX 	2005-012221
		Kathryn McCarthy, CA

Dear XXXXXXXXXX:

Capital Cost Allowance (CCA) On A Vehicle In The Spouse's Name

This is in reply to your e-mail dated March 21, 2005, concerning the above noted subject matter.

You described a sole proprietor ("Mr. X") that will use his spouse's name ("Mrs. X") to obtain a loan. Using the proceeds of the loan, a vehicle will be purchased in the name of Mrs. X for use in Mr. X's business. The funds used to make the loan payments and maintain the vehicle will be Mr. X's. You inquired as to whether Mr. X may claim capital cost allowance (CCA) on the vehicle under the Income Tax Act (the Act).

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 income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. We are, however, prepared to offer the following comments.

Generally, a taxpayer may claim CCA only for property owned by the taxpayer and will be considered to have acquired a depreciable property at the earlier of:

(a) the date on which title to it is obtained, and

(b) the date on which the taxpayer has all the incidents of ownership such as possession, use and risk.

Legal ownership applies when title is transferred to, registered in or otherwise carried in the name of a person. One person's legal ownership of a property may be subject to another person's beneficial ownership. "Beneficial ownership" is always a question of fact and describes the type of ownership of a person who is entitled to the use and benefit of a property whether or not that person has concurrent legal ownership.

In the above example, Mr. X will be entitled to claim CCA for the business use of the vehicle if he in fact holds the beneficial interest in the property. You may wish to discuss this aspect with your legal advisors as well as any possible implications relating to ownership in the context of BC matrimonial property law.

We trust these comments are helpful.

Yours truly,

Kathryn McCarthy, CA
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Planning Branch
(613) 948-6106