24 September 1986 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.

XXXX

F.B. Fontaine (613) 957-2140

SEP 24 1986

Dear Sirs:

Re: Grant Program re Conversion to Electric Heat

This is in reply to your letter dated August 1, 1986, regarding the above-captioned subject.

Pursuant to paragraph 12(1)(x) of the Income Tax Act, (a provision enacted as a result of the Federal Budget of May 23, 1985), a grant paid to your customers which was received on or after that date as an inducement or assistance to convert to electric heat may be included in computing income of the customer (the "taxpayer").

If the taxpayer received the grant in the course of earning income from a business or property, the amount would be included in computing his income for the year in which it was received unless he elects to reduce the cost of property installed under the program by the amount of the grant.

A taxpayer would be considered to receive the grant in the course of earning income from a business or property if, for instance;

(a) the conversion was carried out to a building in which he carries on business, or

(b) the conversion was carried out to a building from which he earns rental income.

A taxpayer who received the grant in respect of his principal residence or any other property that was not used for the purposes of earning income therefrom or from a business would not be required to include the amount of the grant in computing his income or to reduce the capital cost of the property.

We hope this information will be helpful to you.

Yours truly,

ORIGINAL SIGNED BY

for Director Small Business and General Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch