1 April 1998 Ministerial Letter 9804258 - RENOVATION EXPENSE - HERITAGE BUILDING

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:

Tax treatment of restoration expenditures for a heritage building.

Position:

Either deductible as a current expense or included in the capital cost of depreciable property and deducted as CCA.

Reasons:

Whether an expenditure is current or capital in nature is a question of fact.

April 1, 1998

XXXXXXXXXX

Dear XXXXXXXXXX:

The Honourable Herb Dhaliwal, Minister of National Revenue, has asked me to respond to your letter, a copy of which was forwarded to him by the Honourable Sheila Copps, Minister of Canadian Heritage, on January 30, 1998. You have suggested that tax advantages be given to those involved in preserving heritage properties.

Generally, expenditures in respect of the restoration or preservation of a building will be allowed either as a current expense and deducted immediately, or treated as a capital expenditure and deducted partially each year according to the rules for depreciable property. Essentially, whether an expenditure is of a current or capital nature is a question of fact, and all details of a particular situation must be analyzed to make a proper determination. However, the Department has established a number of guidelines, which are based on previous court decisions, that it considers relevant in this regard. These guidelines are covered in the enclosed Interpretation Bulletin IT-128R.

Any changes relating to the income tax treatment of expenditures in respect of heritage properties would require a change in tax policy and an amendment to the Income Tax Act, both of which are the responsibility of the Department of Finance.

I trust that the above adequately explains the tax treatment of expenditures in respect of the preservation or restoration of a heritage property.

		Yours sincerely,

		Denis Lefebvre
		Assistant Deputy Minister
		Policy and Legislation Branch

Enclosure
J. Gibbons
957-2135
March 4, 1998