8 September 2006 External T.I. 2006-0175841E5 - UCC of vehicle, GM points redeemed

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: Taxpayer redeems GM points towards the purchase of a new vehicle for her business. Is the UCC of the vehicle the cost before or after the GM points are redeemed?

Position: The UCC of the vehicle is the cost before the GM points are redeemed

Reasons: The GM points are considered to be a cash equivalent.

                                                2006-017584
XXXXXXXXXX                                      G. Moore
(613) 957-9232
September 8, 2006

Dear XXXXXXXXXX:

Re: Undepreciated Capital Cost of Vehicle

This is in response to your letter of March 13, 2006, inquiring about the undepreciated capital cost ("UCC") of a vehicle.

In your letter, you indicate that you redeemed your General Motors ("GM") points from your credit card when you purchased a vehicle for your business. During the telephone conversation (Moore/XXXXXXXXXX) of April 25, 2006, you asked whether the capital cost of the vehicle, for purposes of claiming capital cost allowance, would be the cost of the vehicle before the redemption of the GM points. We confirm that it is our view that the GM points may be viewed as property and therefore, the capital cost of the vehicle would be its cost before the GM points are redeemed.

We trust that these comments will be of assistance.

Yours truly,

S. Parnanzone
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch