5 May 1981 Income Tax Severed Letter

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.

May 5, 1981

ST. JOHN'S NFLD DISTRICT OFFICE

W.J. Wiseman Basic Files

HEAD OFFICE Corporate Rulings Division F.B. Fontaine 995-1723

XXX

This will reply to your memorandum dated February 18, 1981 in which you present the following situation:

XXXX

2. From a review of the architectural drawings and a tour of the building, you have determined that the basic or main supporting structure thereof appears to be the steel girders and beams that are in the walls and roof. The building has a wooden frame with insulation in the walls and steel siding on the outside.

It is your opinion that it is the steel that is the basic supporting structure of the building even though the wooden walls do have sufficient strength to be self-supporting.

We agree with the taxpayer's comments, in its letter of January 23, 1981 rebutting your proposal to transfer the cost of the building from class 6 to class 3, that the appropriate class for c.c.a. purposes should be determined in accordance with the Department's interpretation of the law at the time the building was acquired. In this regard, it is our view that classification of the building in 1976 would be subject to our interpretation of the law as is applicable to such building, in accordance with IT-79R issued March 10, 1975.

Just about the time your memo was written, the case of Triple "F". Holdings Ltd. v. M.N.R. was heard by the Tax Review Board on the determination of a particular class for a steel building. The case was decided in favour of the taxpayer and it is not intended to appeal to the Federal Court.

In the Triple "F" case, the building was described as "a steel building with steel frame ..." and a building with "... rigid frame with steel channels and framework ...". Notwithstanding that description (and taking into account our less-than-successful record in the courts on this subject), the Minister did not pursue the case on the basis that the building contained a basic structure of steel.

We note you have agreed that the wooden walls of the building alone would be self-supporting. It is our understanding that steel siding also has a role to play in structural support; for instance, in shifting snow and wind load to the frame or foundation. When both of these factors are found it raises doubt as to whether we could successfully argue it is the steel girders and beams that form the basic structural support.

In view of our lack of success with this line of reasoning in the courts, we would recommend that you do not proceed with your proposed re-assessment.

Original signed by Original signé par

R.E. Thompson

Chief Merchandising, Manufacturing and Construction Section Corporate Rulings Division Legislation Branch