7 November 1990 Income Tax Severed Letter - Appropriate CCA Class on Ski Rental Equipment

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: XXX Ski Rental Equipment

This is in reply to your memorandum dated August 1, 1990 in which you request our comments as to whether:

• (i) ski boots qualify as "apparel or costume" under paragraph (k) of class 12 of Schedule II to the Income Tax Regulations and, if so, whether skis, poles and bindings would be "accessories" as described in that class,
• (ii) skis, poles and bindings, if they are not accessories, should be included in paragraph (i) of class 8, and
• (iii) the assets described in (i) should preferably be described as "tools" for the purpose of paragraph (h) or (b) of class 12 or 10 respectively.

Our comments are as follows:

• 1. In the absence of a definition of "apparel" in the Income Tax Act or jurisprudence on the subject, the ordinary meaning (usually the dictionary definition) should be used. In this regard we agree with the comments attached to the submission of the taxpayer's accountants that generally the term means "clothing" or "dress" which would include boots, whether or not they are for skiing. Accordingly, the ski boots should be included in paragraph (k) of class 12 for capital cost allowances ("CCA") purposes.
• 2. Similarly, the ordinary meaning of the word "accessory" should also be used. The Webster's Ninth New Collegiate Dictionary defines the word as "an object or device not essential in itself but adding to the beauty, convenience or effectiveness of something else, (such as) auto accessories, clothing accessories". In this regard the skis, poles or bindings could hardly be said to add to the beauty or effectiveness of the ski boots. In any event, we are more apt to think that the ski boots, poles and bindings are accessories used with the skis rather than the skis, poles and bindings being accessories used with the ski boots. Accordingly, it is our view that the skis, poles or bindings should not be included in item (k) of class 12 for CCA purposes.
• 3. The Department's interpretation of "tools" contained in IT-442 describes a tool as a manual instrument designed to create a physical change in something: such as a hammer, saw, square, screwdriver, etc. Included in the general description of tools are also metal trays, milk crates, etc., used for transporting goods by hand. It would appear that the latter inclusion arose from the Lane's Bakeries [[1973] C.T.C. 2179] (73 DTC 198) in which the Tax Review Board decided that metal trays used for carrying bread were tools based on definitions in Funk and Wagnall and Random House Dictionaries. However, the definitions cited in the case also gave examples of a "tool" similar to those described in the Bulletin.
• 4. The Webster's Dictionary defines "tool" as an instrument (as a hammer) used or worked by hand; an implement. It also defines "instrument" as a utensil or implement and defines "implement" as a tool or utensil forming part of equipment for work. In stating that the terms "tools", "implement", "instrument", "appliance" and "utensil" are synonymous, the Dictionary, however, clarifies that a "tool" suggests an "implement" to facilitate a definite kind or stage of work and suggests a need of skill (in its use) more strongly than for an implement.
• 5. It is our opinion that the assets described in (i) above would not be considered as "tools" as, in one or more ways, they would not meet the definitions of the term, as described in 3 and 4 above. As a result, the skis, ski poles and bindings should be included in class 8 of Schedule II to the Regulations.

We hope our comments will be of assistance to you.