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.
MINISTER/DEPUTY MINISTER'S OFFICE 97-02909M
ADM'S OFFICE
RETURN TO 15TH FLOOR, ALBION TOWER
July 11, 1997
XXXXXXXXXX
Dear XXXXXXXXXX:
I am responding to your letter of March 6, 1997, concerning tax policies relating to the demolition, restoration and donation of heritage buildings. A copy of your letter was sent to the Honourable Jane Stewart, former Minister of National Revenue, by the Honourable Paul Martin, Minister of Finance.
I note that Mr. Martin has addressed your concerns regarding the application of the Goods and Services Tax to building materials and services and the tax policies relating to the demolition and donation of heritage buildings. I will therefore restrict my comments to the income tax treatment of restoration expenses.
Revenue Canada is responsible for applying the provisions of the Income Tax Act as enacted by Parliament. This responsibility includes determining the tax treatment of expenditures related to the repair and renovation of real property. The issue of current versus capital treatment in respect of such expenditures is discussed in Interpretation Bulletin IT-128R, a copy of which is enclosed. In the Department's view, the guidelines set out in this Interpretation Bulletin are a reasonable distillation of the relevant considerations developed by the Courts. However, as a determination of the appropriate tax treatment of a particular expenditure requires an examination of the particular facts, a strict formulation of the appropriate tax treatment, that is current versus capital, is not possible. In addition, expenditures related to the renovation and restoration of heritage properties may only be deducted or capitalized, as the case may be, where the property is used for the purpose of gaining or producing income from business or property. Accordingly, where a heritage property is used as a personal residence, no part of the expenses incurred to renovate or restore the property can be deducted or claimed as capital cost allowance.
I trust my comments have addressed your concerns.
Yours sincerely,
Herb Dhaliwal, P.C., M.P
Attachment
B. Kerr
957-2131
May 16, 1997
971164
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