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.
DM'S OFFICE (2) 94-11354M
ADM'S OFFICE (3)
RETURN TO RULINGS, ROOM 303, MET. BLDG.
AUTHOR
SUBJECT OR CORPORATE FILE
January 3, 1995
XXXXXXXXXX
Dear XXXXXXXXXX:
The Honourable David Anderson, Minister of National Revenue, has asked me to reply to your letter of October 4, 1994, concerning tax policies relating to the renovation or rehabilitation of heritage buildings.
XXXXXXXXXX
I apologize for the delay of my response.
The Department of National Revenue is responsible for applying the provisions of the Income Tax Act as enacted by Parliament. This responsibility includes the determination of the current deductibility or the capitalization of expenditures on real property.
There is a large body of case law that has been developed around the issue of current versus capital treatment for expenditures on repairs and renovations. However, because any determination of this type requires examination of the particular facts of each case, it is not possible to establish fixed rules for all sectors of the community.
Nevertheless, the Department has published guidelines in Interpretation Bulletin IT-128R, which sets out the most important factors to be considered in making this type of determination. The bulletin is based on a number of court decisions, and I believe that it continues to be a useful guide in determining the proper tax treatment of expenditures on real property. I have enclosed a copy of this bulletin for your information.
The annual capital cost allowance rates and the provision in the legislation for recapture or terminal losses on the disposal of property are tax policy issues. I would point out that the usual situation which gives rise to a terminal loss is not something an owner looks forward to, because the proceeds on disposal of the property are such that there is in fact an economic loss. Conversely, in the case of a recapture there is an economic gain because of greater proceeds sufficient to pay the taxes on the recapture, with the excess remaining in the hands of the owner.
Tax policy and amendments to the Income Tax Act fall within the purview of the Department of Finance. I note that you have sent a copy of your submission to the Honourable Paul Martin, Minister of Finance, so that he will be made aware of your concerns regarding tax policy issues.
I wish to thank you for bringing your views to our attention.
Yours sincerely,
Pierre Gravelle, Q.C.
Attachment
A.M. Brake
957-2133
December 13, 1994
4-942806
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1995
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1995
Email this Content