18 July 2003 External T.I. 2003-0025525 - DEF'N AUTOMOBILE

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 CCRA.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.

Principal Issues: As a result of the proposed amendment to paragraph (e) of the definition of automobile in subsection 248(1) of the Act announced in the February 18, 2003 Budget, whether a pick-up truck would be excluded therefrom when it is used to earn income from a farming business, and the situation is such that the farm is located at least 30 kilometres from the nearest urban area having a population of at least 40,000 persons, but the individual who uses the pick-up truck lives on the farm.

Position: No.

Reasons: Subparagraph (e)(iii) of the definition of automobile in subsection 248(1) of the Act requires that the location also be a special work site described in subparagraph 6(6)(a)(i) or a remote work location described in subparagraph 6(6)(a)(ii). Since the individual who uses the pick-up truck lives on the farm, it cannot be a special work site or remote work location.

XXXXXXXXXX Randy Hewlett, B.Comm.

613-957-8973
2003-002552
July 18, 2003

Dear XXXXXXXXXX:

Re: Definition of Automobile - Subsection 248(1) of the Income Tax Act (the Act)

We are writing in response to your letter of June 20, 2003, wherein you requested our opinion on the proposed amendment to paragraph (e) of the definition of automobile in subsection 248(1) of the Act, announced in the February 18, 2003 Budget.

You inquired whether the proposed addition of subparagraph (e)(iii) to the definition of automobile in subsection 248(1) of the Act, will exclude a pick-up truck used to earn income from a farming business, where the farm is located at least 30 kilometres from the nearest urban area having a population of at least 40,000 persons and the individual who uses the pick-up truck lives on the farm.

Our Comments

Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. However, we offer the following general comments.

For taxation years that begin after 2002, subparagraph (e)(iii) excludes from the definition of automobile in subsection 248(1) of the Act, motor vehicles of a type commonly called a pick-up truck that is used in the taxation year in which it is acquired or leased primarily for the transportation of goods, equipment or passengers in the course of earning or producing income at one or more locations in Canada that meet both of the following criteria:

(A) In respect of any of the occupants of the vehicle, is a location that is a special work site described in subparagraph 6(6)(a)(i) of the Act or a remote work location described in subparagraph 6(6)(a)(ii), and

(B) Is at least 30 kilometres outside the nearest point on the boundary of the nearest urban area, as defined by the last census dictionary published by Statistics Canada before the year, that has a population of at least 40,000 individuals as determined in the last census published by Statistics Canada before the year.

One of the requirements that must be met for a location to be considered a special work site is that the taxpayer maintain at another location a self-contained domestic establishment that is the taxpayer's principal place of residence. Similarly, one of the requirements that must be met for a location to be considered a remote work location is that the taxpayer does not maintain a self-contained domestic establishment at that location. In view of the fact that the individual described in your letter lives on the farm, these requirements cannot be met. Therefore, the farm will not be considered a special work site or remote work location for the individual. Consequently, the pick-up truck will not be excluded from the definition of automobile in subsection 248(1) of the Act under proposed subparagraph (e)(iii).

We trust our comments will be of assistance to you.

Yours truly,

John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch

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