12 March 1998 Ruling 9728713 - TYPE OF PROPERTY

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.

3-972871
XXXXXXXXXX J. Teixeira
(613) 957-2095

Attention: XXXXXXXXXX

March 12, 1998

Dear Sirs:

Re: XXXXXXXXXX
Request for Advance Income Tax Ruling

Further to our telephone conversations (XXXXXXXXXX/Teixeira), we are writing to confirm that we are closing our file concerning the above request which was the subject of your letters of XXXXXXXXXX.

As discussed in our telephone conversations, the main issue to be considered in the above request is whether the land held by the XXXXXXXXXX (the "Partnership") is capital property, that is not ineligible property for purposes of paragraph 88(1)(c) of the Act.¹

You represented that such land had been treated by the Partnership as non-depreciable capital property since acquisition and requested that we rule, based on the assumption that such land is capital property. We have to advise that we would only rule in cases where the evidence clearly supports a determination that the proposed transactions are on capital account and there is no evidence that the proposed transactions are on income account, and then only with a proviso that such property is capital property. However, in cases where there is doubt that the proposed transactions are on capital account we will decline to rule.

In this particular case, even if the issue of whether the land is capital property is resolved, it is our opinion that the decision in Avril-Holdings Limited v Minister of National Revenue (Supreme Court of Canada) 70 DTC 6366, serves as precedent for treating a sand and gravel pit as an "industrial mineral mine" and thus depreciable property under subsection 13(21) of the Act, even though the sand and gravel pit is not a mine.

A billing will be forwarded to you for the time spent on your request.

Yours truly,

for Director
Reorganizations and International Division
Income Tax Rulings and Interpretations
Directorate
Policy and Legislation Branch
endnotes

¹ "Act" means the Income Tax Act, R.S.C. 1985 (5th Supp.) c.1 as amended to the date hereof, and unless otherwise stated, every reference herein to a part, section, subsection, paragraph or subparagraph is a reference to the relevant provision of the Act.