19 May 1999 External T.I. 9906765 - TELEPHONE EQUIPMENT - EXEMPT 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.

PRINCIPAL ISSUE:

Whether telephone equipment generally used in an office constitutes exempt property pursuant to subparagraph 1100(1.13)(a)(i) of the Regulations.

Position TAKEN:

Yes.

REASON FOR POSITION TAKEN:

Legislative analysis.

XXXXXXXXXX 			5-990676
L. J. Roy, CGA
Attention: XXXXXXXXXX 

May 19, 1999

Dear Sir:

Re: Specified Leasing Property Rules

This is in reply to your letter of March 10, 1999, wherein you requested our opinion as to whether telephone system, comprising of switching equipment, wiring and telephone or in the alternative, the individual telephone used in an office, would be an exempt property as defined in subparagraph 1100(1.13)(a)(i) of the Income Tax Regulations (“Regulations”).

Written confirmation of the tax implications inherent in particular proposed transactions are given by this Directorate only where the transactions are outlined in an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R3 dated December 30, 1996. Questions concerning actual fact situations should otherwise be directed to your tax services office. Although we cannot provide a specific answer with regard to your query, we offer the following general comments which are not binding on the Department.

Pursuant to subparagraph 1100(1.13)(a)(i) of the Regulations, exempt property includes general purpose office furniture or office equipment included in Class 8 (including for greater certainty, mobile office equipment such as cellular telephones and pagers) ..., other than any individual piece thereof having a capital cost to the taxpayer in excess of $1,000,000.

As stated in paragraph 8 (aa) of Interpretation IT-472, telephone switching equipment acquired after May 25, 1976, and installed on the premises of a customer of the owner of such equipment are included in Class 8. However, wires or cables are not included in that Class but generally in paragraph (j) of Class 3 in Schedule II of the Regulations.

Generally, equipment included in Class 8 that are commonly used in an office environment would be exempt property pursuant to subparagraph 1100(1.13)(a)(i) of the Regulations. Consequently, it is our view that telephone equipment generally used in an office environment would qualify as exempt property under subparagraph 1100(1.13)(a)(i) of the Regulations.

The foregoing opinions are not rulings and in accordance with the guidelines set out in IC 70-6R3 they are not binding on Revenue Canada.

We trust the above comments will be of assistance to you.

Manager
Financing and Plans Section
Financial Industries Division
Income Tax Rulings
and Interpretations Directorate
Policy and Legislative Branch