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.
Principal Issues:
Does 67.3 apply to an automobile used as a travelling showroom?
Position TAKEN:
Yes
Reasons FOR POSITION TAKEN:
Meets definition of passenger vehicle in the Act
952303
XXXXXXXXXX Michael Cooke
Attention: XXXXXXXXXX
September 18, 1995
Dear Sirs:
Re: Section 67.3 of the Income Tax Act (the Act)
This is in reply to your letter of August 25, 1995, wherein you requested our views on the application of section 67.3 of the Act to the fact situation described in your letter.
Section 67.3 of the Act restricts the amount that may be deducted in respect of the leasing costs of a passenger vehicle. A passenger vehicle is defined in subsection 248(1) of the Act in part, as an automobile leased under a lease entered into or renewed after June 17, 1987.
The term automobile is also defined in subsection 248(1) of the Act as a motor vehicle that is designed or adapted primarily to carry individuals on highways or streets and that has a seating capacity for not more than the driver and eight passengers but excludes an ambulance, taxi, bus, or a hearse that is used in a funeral business. The definition of automobile also excludes certain vans, pick-up trucks and other similar vehicles where certain seating capacity and business use requirements are met. A motor vehicle is defined in this subsection as meaning an automotive vehicle designed or adapted to be used on highways or streets but excludes a trolley bus or a vehicle designed or adapted to be operated exclusively on rails.
In relation to the situation you have described, a "luxury import sedan" leased after June 18, 1987, would meet the above definitions of motor vehicle, automobile and passenger vehicle regardless of the proposed business use of such a vehicle. Accordingly, section 67.3 of the Act will apply to restrict the deduction for any lease costs in excess of the prescribed limit.
We trust the foregoing comments will be of assistance to you.
Yours truly,
F. Lee Workman
Section Chief
Financial Institutions Section
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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