23 April 1990 External T.I. 32245 F - Definition of Vessel in Canada Shipping Act

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.

April 23, 1990

Dear Sirs:

Re: 24(1) Request for Advance Income Tax Ruling

The purpose of this letter is to respond to the issues which you raised in your letter of February 19, 1990.

You pointed out that the definition of vessel in the Canada Shipping Act is an inclusive definition rather than an exclusive definition and accordingly is meant to be very wide ranging. While we concur that the definition is worded as an inclusive type, we feel that it would be inappropriate to disregard the words "used or designed to be used in navigation." The definition encompasses not only ships and boats but "any other description of vessel"; however, a proviso is included, which states that the object must be "used or designed bused in navigation."  It is our understanding that 24(1) which  24(1) will acquire will neither be used nor be designed to be used in navigation, and therefore it is our conclusion that such will not fit within the definition of vessel.

You referred to the case Regina v. The Gulf Aladdin (1977) 2 WWR 677 wherein it was held that a barge continues to be a ship when at rest, whether anchored, tied to a wharf, or beached.  You reasoned that, since a ship continues to be a ship regardless of its circumstance and since a ship is a vessel, a barge would appear to be a vessel regardless of its circumstance.  Accordingly, you feel that the proposed 24(1) should be regarded as vessels.  We note that the object under consideration in The Gulf Aladdin case was a tanker barge which was pulled by tug from place to place.  Its brief description indicates that it was an object which was designed for use in navigation, and the facts of the case demonstrated that it was used in navigation to transport goods. However, 24(1)

You noted that, in the Canada Shipping Act, all ships are vessels but not all vessels are ships, and therefore, in determining whether an object is a vessel, it is insufficient to prove that the object is not a ship. You indicated that several cases in law to which we referred are irrelevant to the ruling request since the cases were concerned with the determination as to whether certain objects were ships, not vessels.  We agree with your point that not all vessels are ships, as "ship" is defined (for most purposes of the Canada Shipping Act) as including "any description of vessel used in navigation and not propelled by oars."  The cases to which we referred were mentioned because they included some meaningful discussion on what constitutes a vessel or ship, notwithstanding that the central issue in each case may have been whether an object was a ship (not whether it was a vessel).

Regarding the meaning of the word "vessel," you observed that the Income Tax Act (in paragraph 13(21)(g)) refers to the definition of vessel contained in the Canada Shipping Act, and therefore, in your view, if an object is a vessel outside the Income Tax Act, it is a vessel for purposes of the Income Tax Act too.  We do not agree that positions taken by other Departments in administering other Acts are necessarily binding in administering the Income Tax Act.

You urged us to give the term "vessel" a broad interpretation and noted that such interpretation is reflected in our Interpretation Bulletin 267R (in paragraph 16), wherein we listed various objects which are considered to be vessels.  We note that paragraphs 14 to 16 of this bulletin concern certificates issued by the Minister of Industry, Trade and Commerce.  In paragraph 16 of the bulletin, it is stated that "the following are considered vessels for registration Purposes." That is, in administering the Canada Shipping Act, the (former) Department of Industry, Trade and Commerce is generally willing to register barges et cetera.  As a general statement, barges typically are designed to be used in navigation and are in fact used in navigation, in which case we would recognize them as vessels.  However, this general statement is not applicable to the proposed transactions in the ruling request.

You stated that Mr. R. Joyce of this Department advised 24(1) on May 18, 1989 that a favourable ruling was forthcoming.  While it is unfortunate that it may have been indicated to your client that it could anticipate receiving a favourable ruling, we do not feel that it is possible to recognize intermediary statements as substitutes for advance income tax rulings.  Frequently taxpayers or their representatives desire to know early in the ruling process whether they can anticipate a favourable response, and we can respond to such enquiries only on an informal basis and based on our understanding at that time of the facts and issues.  While there is never an intent to mislead someone regarding the final outcome, any intermediary indications must be regarded as expressions of personal opinion rather than as binding statements of the Department.

As a final issue, you expressed the view that there needs to be consistency among rulings issued by our Department.  Since the law with respect to the issues at hand has not changed since the time of our issuance of a favourable ruling to another taxpayer in apparently similar circumstances, you feel that consistency would dictate that we issue a favourable ruling for 24(1) While consistency is a desirable attribute for our Department to seek in applying the Income Tax Act, a problem arises when we determine, for whatever reason, that a view previously held is inappropriate. When the change is brought about by an amendment to the legislation, the date of coming into force of the new provision generally determines the timing of the change.  Alternatively, when a change is made to a position previously published by our Department, the change is generally effective upon issuance of a revised publication.  With respect to unpublished positions which are implicit in rulings, we do not feel there is the same necessity to defer implementation of our current views.  If there is a change in our views, the most consistent approach would be to reverse our previous rulings.  However, advance income tax rulings are binding on the Department and protect a taxpayer from such changes, so the consistency must be prospective.  That is, all future rulings should be consistent with our present positions.  We would also like to point out that rulings are based on the precise facts and proposed transactions of specific taxpayers, and such details will never be exactly the same for different taxpayers.

Our opinion remains that we cannot issue a favourable advance income tax ruling on the proposed transactions, however we will defer further action on the ruling request in order to provide you with opportunity to consider these matters further.

Yours truly,

for DirectorBusiness and General DivisionSpecialty Rulings DirectorateLegislative and Intergovernmental Affairs Branch