CRA considers experimental development of a manufacturing company to potentially qualify as a manufacturing or processing activity for class 29 purposes

CRA considers that a machine which is used by a manufacturing company in experimental development will qualify as a Class 29 asset for CCA purposes provided that it relates to the ultimate sale of commercial product. Jumping over some of the qualifiers, this likely would be the case where the machine is used to create a prototype of equipment that would be used in the manufacturing of such product.

This question now is relevant as s. 37(1)(b), which provided a current deduction for research-related capital expenditures on depreciable property, has been repealed.

Neal Armstrong. Summary of 11 August 2014 Memo 2014-0528231I7 F under Sched. II – Class 29.