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 10, 1983
HEAD OFFICE Corporate Rulings Division R.B. Day 995-1723
RE: Classification of Assets
This is in reply to your memorandum of March 29, 1983 wherein you requested our views regarding the proper asset classification for a crane runway.
Our understanding of the facts in this case is as follows:
This taxpayer is a manufacturer eligible for the manufacturing and processing profits deduction.
XXXX
The taxpayer included both the crane and the crane runway in Class 29 of Schedule II of the Regulations.
It would appear that you have accepted the overhead crane as a Class 29 asset. However, with regard to the proper classification of the crane runway, you have requested our views as to whether the runway should be:
(a) included in Class 8, by virtue of paragraph (a), (b) or (i) thereof, or
(b) Class 3 by virtue of the reference to a structure in Class 8(a).
It is our view that the crane runway should be included in Class 29 along with the overhead crane. The reasons for our view are as follows:
In order for the crane to be included in Class 29, it must be
"Property that would otherwise be included in another class in this Schedule
(a) that is property ... acquired by the taxpayer after May 5, 1982,
(i) to be used directly or indirectly by him in Canada primarily in the manufacturing or processing of goods for sale or lease,".
From its description, it would appear that the crane runway would appear to be property that is
"a structure that is manufacturing or processing machinery or equipment"
that would ordinarily be included in Class 8 by virtue of paragraph (a) thereof. However, since the overhead crane cannot function without the runway, it follows that the runway would also be property "used directly or indirectly ... primarily in the manufacturing or processing of goods for sale or lease". It follows therefrom, that the runway would be included in Class 29 by virtue of its use and the fact that it is "Property that would otherwise be included in another class in this Schedule" (i.e. Class 8).
This interpretation is consistent with guidelines set out in paragraphs 4 and 5 of IT-147R .
With regard to the other aspects of your question, a "structure" used in manufacturing and processing that does not have the characteristics of a building is included in Class 8 rather than Class 3. For purposes of Class 8(i)(x) and Class 4 of Schedule II a tramway track would be a track associated with a municipal street railway system.
Original signed by
Chief Merchandising & Manufacturing Section Corporate Rulings Division Legislation Branch
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