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12 March 2012 Internal T.I. 2011-0431631I7 F - Catégorie d'amortissement- maison flottante
Principal Issues: [TaxInterpretations translation] For paragraph 20(1)(a) deduction purposes, in which class of depreciable property would a floating home equipped with an outboard motor, and navigated on a large lake by short-term renters, be included?
Position: Generally Class 7, unless it satisfies the requirements of subsection 1101(2a) of the Regulations.
Reasons: Application of the Act.
March 12, 2012
|
XXXXXXXXXX Tax Services Office
Business Audits
Attention: XXXXXXXXXX
|
Income Tax Rulings Directorate
Business and Trusts Division
Danielle Bouffard
2011-043163 |
Depreciation Class for a floating home
This memo is in response to your email dated December 15, 2011 in which you requested our comments regarding the above subject. We took into account the information given to us by the representative during a telephone conversation (XXXXXXXXXX/Bouffard) on March 1, 2012.
Unless otherwise indicated, all statutory references herein are to the provisions of the Income Tax Act (the "Act").
You described a floating home or "houseboat" as being a type of large pontoon with an outboard motor that travels under its own power. That floating home is located on a large lake. People rent it for a short period of time, such as a day or a weekend, and navigate the lake.
You wish to know, in which class of depreciable property would that floating home be included for the purposes of the deduction provided in paragraph 20(1)(a)?
As noted in the document # 2010-0377841, a boat that qualifies as a "vessel" within the meaning of subsection 13(21) is generally included in Class 7 of Schedule II to the Income Tax Regulations (the "Regulations").
Subsection 13(21) defines a vessel (“navire”) as a vessel within the meaning of the Canada Shipping Act. However, that Act was repealed in 2001 and replaced by the Canada Shipping Act, 2001. Paragraph 44(h) of the Interpretation Act respecting the interpretation of statutes and regulations provides that any reference in an unrepealed enactment to the former enactment will, with respect to a subsequent transaction, matter or thing, be read and construed as a reference to the provisions of the new enactment relating to the same subject matter.
The Canada Shipping Act, 2001 defines a "vessel" as a boat, ship or craft designed, used or capable of being used solely or partly for navigation in, on, through or immediately above water, without regard to method or lack of propulsion, and includes such a vessel that is under construction. However, this definition excludes a floating object of a prescribed class. We contacted a Transport Canada representative who confirmed to us that, to date, no regulations to that effect have been promulgated.
We are of the view that a floating home, as described in this request, would generally be included in Class 7 of Schedule II of the Regulations. However, Class 7 excludes "Canadian" ships that include, among other things, a separate class prescribed by subsection 1101(2a) that is qualified for accelerated CCA ("CCA") under paragraph 1100(1)(v) of the Regulations.
A vessel described in subsection 1101(2a) of the Regulations (including the furniture, fittings, radiocommunication equipment and other equipment attached thereto) is one that satisfies all of the following conditions:
(i) it was constructed in Canada;
(ii) it is registered in Canada; and
(iii) it had not been used for any purpose whatever before it was acquired by the taxpayer.
We hope that these comments are of assistance.
François Bordeleau, Advocate
Manager
Business and Trusts Section
Income Tax Rulings Directorate
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