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.
Dear Sirs:
XXX
We are writing in reply to your letter of November 15, 1990 wherein you requested our opinion as to the classification for capital cost allowance purposes of XXX. We apologize for the delay in responding to your query.
XXX
Our Comments
As expressed at paragraph 6 of Information Circular 70-6R2 dated September 28, 1990, the Department will not express opinions on definite transactions that are being proposed other than by way of an advance income tax ruling, nor will the Department provide rulings on completed transactions.
While we are unable to provide confirmation of the tax effect with regards to situations such as the one you described, we do offer the following general comments for your assistance.
The Department has issued IT-336R on January 9, 1985 which discusses the necessary criteria needed for pollution control property to be eligible for inclusion in class 24 or 27 of Schedule II of the Income Tax Regulations (the "Regulations").
In order for equipment to qualify as pollution control equipment under class 24 or 27 of Schedule II of the Regulations, one of the many requirements contained in either of those two classes which must be satisfied, is that the equipment was acquired "... primarily for the purpose of preventing, reducing, or eliminating pollution ...". The words primarily for the purpose places a direct relationship between the equipment and the pollution the equipment would be preventing, reducing or eliminating. The equipment must have more than a casual relationship with the prevention, reduction, or elimination of pollution, but rather, a direct connection must exist between the two, ie. the equipment and the pollution which is being caused by the taxpayers operations.
In addition, both these classes only apply inter alia, to equipment used in businesses which have been in operation in Canada before 1974. The intent being to permit certain businesses a faster write-off for equipment they purchase that prevents, reduces or eliminates pollution that is produced by businesses in operation before 1974. Both classes also impose the requirement that upon application, the Minister of the Environment must accept that the primary use of the equipment is to prevent, reduce or eliminate the pollution referred to in that class.
However it is the Department's opinion that the XXX business would be construed as advanced income tax rulings, nor are they binding on the Department.
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© Her Majesty the Queen in Right of Canada, 1991
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© Sa Majesté la Reine du Chef du Canada, 1991
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