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.
DATE: October 23, 1981
TO- CHARLOTTETOWN DISTRICT OFFICE
FROM- HEAD OFFICE Corporate Rulings Directorate S.E. Adams 995-1178
ATTENTION W.A. MacDonald, Audit Review
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Property used for specialized purposes means a property used primarily (more than 50% of the time) in the carrying on of an active business in Canada. "Used primarily" is also interpreted to refer to portion of use of space where appropriate and must be determined for each taxation year on the basis of circumstances existing during that particular year.
A depreciable property that has not been used for any purpose whatever before it was acquired by the issuer will qualify as a specified property, provided it is not specifically excluded by subparagraphs 15.1(3)(f)(iii) and (iv) of the Income Tax Act (the Act) and was acquired within the specified time. A depreciable property is defined in paragraph 13(21) (b) of the Act as one in respect of which the taxpayer is permitted to claim a capital cost allowance pursuant to paragraph 20(1)(a) of the Act. The Act reads that the depreciable property must not have been used "for any purpose whatever before it was acquired by the issuer." The presence of the word "whatever" suggests a strict interpretation.
Furthermore, an extension, addition, major overhaul, or renovation of a depreciable property will also qualify as a specified property for purposes of paragraph 15.1(3)(f) provided:
a) the expenditure is made within the specified time,
b) the materials used to make the changes are new materials that have not been previously used for any purpose whatever, and
c) the expenditure qualifies as depreciable property pursuant to paragraph 13(21)(b) of the Act. For the Department's guidelines on distinguishing between capital and current expenditures, see paragraph 4 of IT-128 .
The qualification of renovations, additions, and so on to be considered to be specified property is not affected by the fact that the original building or machine itself does not qualify as a specified property.
Sufficient information has not been submitted to determine whether Pierlot will qualify to issue an SBDB. However, it is our opinion, based on the foregoing, that the new office area will constitute "property used for specified purposes" as defined under paragraph 15.1(3)(e) of the Act. It is a question of fact as to whether the other renovations fall within the provisions of the above paragraph. If the other renovations fall within the provisions of the above paragraph, it is our opinion that these renovations would constitute "property used for specified purposes." Furthermore, the above renovations should increase the taxable benefit to be included in the incomes of Hubert Pierlot and his family for the use of the farm house.
Chief Finance, Insurance & Leasing Section Specialty Corporations Rulings Division Corporate Rulings Directorate Legislation Branch
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© Her Majesty the Queen in Right of Canada, 1981
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© Sa Majesté la Reine du Chef du Canada, 1981
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