7 April 1991 Income Tax Severed Letter - Investment Tax Credit on Greenhouses

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.

Subject: Forestry Issue Report #08
I.T.C. on Greenhouses

We are writing in reply to your memorandum of December 20, 1990 requesting our confirmation that certain positions which you intend to rely upon in your proposed Forestry Issue Reports are the current policies of Rulings.

In regards to draft report #08, we wish to confirm that our position remains as set out in Rulings Opinion #7-3540 dated February 9, 1989 such that a greenhouse is to be accepted as a "building" for all purposes of the Income Tax Act, notwithstanding the separate listing of "greenhouse" in Class 6 of Schedule B to the Regulations.

As regards to the draft report itself may we suggest that you consider the following:

Under heading "Legislation"

• • adding a reference to Classes 1 and 3.

Under heading "Issue"

• • restating the issue so as to put the main point at the beginning.

For example,

Is a "greenhouse" used to grow tree seedlings a "building" which may qualify as a prescribed building pursuant to Regulation 4600(1) for purposes of the ITC, given that Class 6(d) of Schedule B specifically allows for CCA on greenhouses, while several classes, including Class 6, allow for CCA on buildings however described?

Under heading "Department's Policy"

• • simply stating that a greenhouse is a building for all purposes of the Act, including ITC, but noting, however, that for purposes of paragraph 37(7)(f) a building must further qualify as a "prescribed special-purpose building".
• • in view of paragraph 6 of IT-322R, mentioning that it is a question of fact whether the operations of market gardens, nurseries and greenhouses qualify as "farming" in particular circumstances and relating this point to the definition of "qualified property in paragraph 127(9).

Under heading "Background"

• • noting that tax jurisprudence including British Columbia Forest Products Limited, [[1969] C.T.C. 156] 69 DTC S127 (S.C.C.), supports the broad meaning of the term "building" which, unless qualified, allows for inclusion of a wide range of structures such as greenhouses, aeroplane hangars, etc.

We hope that our comments are helpful to you.