28 March 1990 Ruling 58921 F - Additional Allowance-Certified Production

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.

March 28, 1990

Dear Sirs:

Re: Additional Allowance-Certified Production

We are writing in reply to your letter of October 17, 1989, wherein you requested our opinion on whether a taxpayer can claim additional capital cost allowance ("CCA") on a class 10(w) property owned directly by him outside a partnership to the extent of the net income from a certified production allocation to him as a partner in a partnership.

Facts

Our understanding of the facts given to illustrate the issue is as follows:

24(1)

Your Question

24(1)

Our Comments

While we are unable to provide confirmation of the income tax effects of the particular situation outlined in your letter, we can offer the following general comments related to the application of paragraph 1100(1)(l) of the Regulations and paragraph 96(1)(f) of the Income Tax Act (the "Act").

It is our opinion that by virtue of paragraph 96(1)(f) of the Act, net income allocated to a partner from a partnership that is earned from class 10(w) or class 12(n) property owned by the partnership is considered to be that partner's income from such property for the purposes of subparagraph 1100(1)(i) of the Regulations. Therefore, to the extent of such net income allocated to a partner, that partner will be entitled to claim the additional allowance pursuant to paragraph 1100(1)(l) of the Regulations on the undepreciated capital cost of class 10(w) property owned directly by that person outside that partnership.

These comments represent our opinion of the law as it applies generally. As indicated in paragraph 24 of Information Circular 70-6R dated December 18, 1978, this opinion is not a ruling and accordingly, it is not binding on Revenue Canada, Taxation.

We trust these comments will be of assistance.

Yours truly,

for DirectorBusiness and General DivisionSpecialty Rulings DirectorateLegislative and Intergovernmental Affairs Branch