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.
MINISTER/DM'S OFFICE Y.S. 93-0297T ADM'S OFFICE CENTRAL RECORDS RETURN TO RULINGS, ROOM 303, MET. BLDG.
XXXXXXXXXX
Dear XXXXXXXXXX
I am writing in reply to your letter of January 5, 1993, written on behalf of your constituent who is seeking clarification of Interpretation Bulletin number IT-102R2. I apologize for the delay in replying.
Generally, leased cars are treated as depreciable property for the duration of the lease. Upon expiry of the lease and the return of the car to the dealership, a change in use is considered to have occurred. The former depreciable asset becomes inventory for sale by the dealership as an integral part of its normal business operations. The undepreciated capital cost at the time of transfer from depreciable property, to inventory for sale, is normally the value used when recording the transfer.
In the absence of all the facts of the case, it is difficult for me to comment further. However, because of the very nature of the operation of a car dealership, it is difficult to see how the sale of used leased cars could be considered to be separate and distinguishable from the normal operations of the dealership. Should your constituent require further clarification, I invite him to contact Mr. D.A. Graham, Chief of Audit at the Scarborough District Taxation Office who will be pleased to assist. Mr. Graham can be reached by calling (416) 973- 3944.
I wish to thank you for writing and trust that you will find my comments helpful.
Yours sincerely,
Otto Jelinek
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© Her Majesty the Queen in Right of Canada, 1993
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© Sa Majesté la Reine du Chef du Canada, 1993
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