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.
FEB 15 1989
TO Publications Division R. Shultis Director
D. Delorey
FROM J.A. Szeszycki 957-2130
SUBJECT: Project 1600
IT-63R3
Standby Charge
We are writing to confirm the telephone discussion of February 9, 1989 (Szeszycki/Delorey) concerning a change made to the content of paragraph 11 of the revised interpretation bulletin. The change in question is the inclusion as part of the cost of an automobile for the purpose of the standby charge calculation under subsection 6(2) of "capitalized major repairs". It is our understanding that this addition was based on comments contained in a draft version of the Taxable Benefits Manual (TOM 39), which has not yet been released and which in turn was largely supported by an "outside" publication.
It is our view that repairs, major or otherwise, to an automobile merely restore the vehicle to a sound operating condition and should, therefore, not be considered a capital expenditure. Furthermore, including the cost of major repairs in the calculation of the cost would have an irrevocable effect on the standby charge calculation.
While we recognize the possibility that under unusual circumstances an argument could be made in favor of capitalization, we foresee that including such costs in the calculation of the standby charge would in most instances penalize an employee who uses the automobile mainly for business purposes.
We therefore recommend that the phrase be deleted.
Original signed by Original signé par
M. A. HILTZ
M.A.G. Hiltz Acting Director General Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch
c.c. John Wilson, Source Deductions Division
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© Her Majesty the Queen in Right of Canada, 1989
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© Sa Majesté la Reine du Chef du Canada, 1989
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