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.
REVENUE CANADA ROUND TABLE CTF- 1992 CONFERENCE Dec. 3, 1992
Question #70
LEASEHOLD IMPROVEMENTS AND THE "AVAILABLE FOR USE" RULES
Subsections 13(27) and 13(28) contain definitions of "available for use" for the purpose of the restriction on deduction contained in subsection 13(26). The definition contained in subsection 13(28) is to be used for property "that is a building or part thereof of a taxpayer". The definition in subsection 13(27) is to be used for other property.
In the Department's view, which definition should be used where a tenant makes a leasehold improvement which qualifies for inclusion in Class 13 or a leasehold improvement which must be included in, for example, Class 1 or Class 3 as a building or part thereof by virtue of the rules contained in subsection 1102(5) of the Regulations?
Answer:
Subsection 1102(5) of the Income Tax Regulations (hereinafter, "the Regulations") applies, namely, when a reference is made in Schedule II of the Regulations to a building or other structure (there is no mention of the phrase "or part thereof") where a leasehold interest has been acquired by reason of the fact that the taxpayer erected a building or structure on leased land. Its application is restricted to that reference; it does not deem the leasehold interest acquired in such circumstances to be a building or part thereof for the general purposes of the Income Tax Act (hereinafter, "the Act"). Schedule II of the Regulations describes different types of property mainly for purposes of establishing capital cost allowance rates.
It is Revenue Canada Taxation's position that leasehold improvements are property (other than a building or part thereof) acquired by the taxpayer within the meaning of subsection 13(27) of the Act, even though a leasehold interest may be subject to subsection 1102(5) for purposes of classification in Class 1 or Class 3, rather than Class 13 of Schedule II of the Regulations.
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1992
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1992