31 December 1993 Income Tax Severed Letter 9325657 - CCA Classification of Special-purpose Vehicle

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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department. Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

                                              December 31, 1993

       Vancouver District Office              HEAD OFFICE
                                              Rulings Directorate
       Attention:  Bill Holmes                (613) 957-8953

                                              932565

Classification of Vehicle

This is in reply to your request of September 14, 1993 for our comments on the classification for capital cost allowance purposes of a certain vehicle. Of particular concern to you was whether the vehicle should be classified separately from the equipment which it will carry.

The only description of the vehicle and its equipment is the very brief description and pictures contained in a 2-page summary produced by the manufacturer.

                      XXXXXXXXXX

Our Comments

It is not possible for us to be definitive in our response due to the lack of information, however we are able to make the following general comments.

It is the Department's general view that when equipment is attached to an automotive chassis in such manner that it becomes an integral part of the automotive equipment, we would tend to classify the asset according to the carrying component. Whether or not the equipment can be removed from the vehicle is only one criterion to consider in determining whether the equipment is an integral part of the vehicle. One would also need to consider whether the equipment was designed to remain in or on the vehicle. If the equipment is an integral part of the vehicle, the entire vehicle would normally be classified in class 10 by virtue of paragraph (a) thereof. However, one should be cognizant of two cases, Halliburton Services Ltd. ( 85 DTC 5336 FCTD) and Nowsco Well Service Ltd. ( 90 DTC 6312 FCA), that considered, inter alia, the classification of equipment attached to a vehicle. In those cases, it was concluded that the equipment which was attached to a truck chassis should not be included in class 10(a) as automotive equipment since to describe the equipment as belonging to the automotive equipment category is "neither logical nor in accord with the common understanding of the function these components play. They are clearly contractor's moveable equipment." It was stated that the cases dealt with "particular and somewhat unusual facts".

Although the classification of assets in the two cited cases concerned whether the equipment would qualify for investment tax credit purposes, these cases indicate that there may be cases where the Department's general position would not be valid for capital cost allowance purposes.

R. Albert for Director Business and General Division Rulings Directorate Legislative and Intergovernmental Affairs Branch