8 September 1989 Internal T.I. 74229 F - Northern Residents Deduction - Definition of an "All-weather Road"

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.

Subject: Northern Residents Deduction Definition of an "all-weather road"

This is in reply to your memorandum dated August 11, 1989, in which you requested our opinion on the definition of an "all-weather road" as contained in Income Tax Regulation 7302(1). Specifically, you wish to know whether certain roads which have been closed to traffic for reasons other than freeze-up or break-up would still meet the criteria of "ordinarily continuously usable" as that term is used in the definition of an "all-weather road".

In reviewing the definition of an "all-weather road" in Income Tax Regulation 7302, we note that the definition is also applicable to Income Tax Regulations 7303 and 7304.  Income Tax Regulation 7303 states, in part, "An area is a prescribed area for a taxation year for the purposes of section 110.7 This is indicative, in our view, that the test of whether a road is an "all-weather road" in Income Tax Regulation 7302 is a question of fact which must be reviewed each taxation year on the basis of the particular circumstances peculiar to that road in any given year.  The phrase "ordinarily continuously usable" as applied in the definition of an "all-weather road" may, in our view, be interpreted to mean "as a matter of regular occurrence".  In this light, in a situation where a road had the traffic flow interrupted for more than three weeks during the annual break-up period only, a reasonableness test would have to be applied in determining whether the situation warranted the road being disqualified as coming within the definition of an "all-weather road".  It would be dependent upon how much longer than three weeks the road was closed in determining whether it was "ordinarily continuously available".  In the situation where it was closed for four consecutive weeks in the spring and open continuously for the remainder of the year, it would be our view that the road would qualify as an "all-weather road" within the meaning of the definition.  On the other hand, where the road was closed for seven or eight weeks during the spring and sporadically throughout the remainder of the year, it is our view that the road may not qualify as an "all-weather road" under the definition.  Again, a reasonableness test would have to be applied on a case-by-case basis in determining whether any particular road was "ordinarily continuously usable" during the year outside of the three week periods in the spring and fall.  Accordingly, we are not able to provide you with a minimum number of days during which a road may be closed to traffic or that ferry service could be disrupted before they are no longer considered to be "ordinarily continuously usable" for a given year.

You have also asked for our opinion on whether Highway 556 (Case #l) and Highway 6 (Case #2) referred to in your memorandum can be considered to be "ordinarily continuously usable" all-weather roads for the 1987 and 1988 taxation years.  Our understanding of the facts of the situation may be summarized as follows:

Case # 1

Record of road closures on Highway 556 near Sault Ste. Marie, Ontario.  All closures occurred during and are due to spring thaw and disruptions in service are for consecutive weeks.

1979  -  7 week closure 1980  -  no closures reported 1981  -  2 week closure 1982  -  1 week closure 1983  -  1 week closure 1984  -  5 week closure 1985  -  1 week closure 1986  -  5 week closure 1987  -  no closures reported 1988  -  no closures reported

As there were no closures reported during the 1987 and 1988 taxation years, it is our view that Highway 556 would qualify as an "all-weather road" within the meaning of Income Tax Regulation 7302.

Case # 2

Record of road closures on Highway 6 at Cape Horn Bluffs, British Columbia which we understand has been closed for three days only in the three years prior to October 3, 1988 for regular maintenance.

1.     From October 3, 1988 to October 20, 1988

     Daily closures Monday to Friday from 08:30 to 12:00

     20 minute delays on weekdays

     no delays on weekends

2.     From October 21, 1988 to November 14, 1988

     Full closure (24 hours/day)

     pedestrian traffic only

3.     From November 14, 1988 to December 23, 1988

     Daily closures Monday to Friday from 08:30 to 12:00 hours.

     20 to 30 minute delays Monday to Saturday

     no delays on Sundays

4.     November 25, 1988

     Road closure from 08:30 to 12:35

5.     December 1, 1988

     Road closure from 08:30 to 14:03

6.     December 8, 1988

     Road closure from 08:30 to 19:00

In addition, major road upgrading was to begin on July 24 of this year with an anticipated completion date of October 31, 1990.  The road will be closed to all traffic from September j, 1989 to December 8, 1989 and there will be delays ranging from twenty minutes to three and one-half hours during working days for the remainder of the construction period.

Based on the above, it is our view that Highway 6 may be considered an all-weather road for the 1987 taxation year but should not be considered an all-weather road for the 1988 taxation year as it was not ordinarily continuously usable in the 1988 taxation year.  In addition, it appears that as the road will be closed to all traffic from September 7, 1989 to December 8, 1989 it should also not be considered an all-weather road for the 1989. taxation year.  Whether it should receive the same treatment for the 1990 taxation year is a question of fact which will have to be decided based upon the duration of road closures during the 1990 calendar year.

B.W. Dath Director Small Business and General DivisionSpecialty Rulings Directorate Legislative and Intergovernmental Affairs Branch

c.c.       Current Amendments andRegulations Division