Subsection 1104(2)
Computer Software
Administrative Policy
7 October 1991 T.I. (Tax Window, No. 10, p. 17, ¶1506)
A right or licence to use computer software includes any right or licence for a limited or unlimited period to use the computer software for commercial exploitation, including the right to reproduce software, the right to use it internally, the right to sublicence it, the right to copyright protection or the right to use a trademark in respect of it.
Eligible Non-Residential Building
Administrative Policy
26 May 2009 External T.I. 2009-0318441E5 F - Bâtiment non-résidentiel admissible
Would an addition made after March 18, 2007 to a seniors’ residence qualify as an eligible non-residential building? CRA stated:
In order to determine whether a building is used for residential purposes - and therefore for purposes that do not qualify for accelerated CCA - … it is necessary to consider the use of the building by its occupants. For example, a building - such as an apartment tower - that is used by its occupants as a residence will not be an eligible non-residential building. Conversely … a building that is used in the operation of a hotel complex or a building that is more institutional than residential - is generally used for non-residential purposes. …[A] building … for the elderly - whose units … are similar to those of an apartment building - cannot constitute an eligible non-residential building.
General-Purpose Electronic Data Processing Equipment
Administrative Policy
27 July 2010 External T.I. 2009-0347471E5 F - Déduction pour amortissement - Catégorie 52
A personal digital assistant (PDA) is acquired for the purpose of communicating delivery and pick-up information to truckers. Its other features include use for GPS, receiving and sending emails, Internet access, and a touch screen and a detachable pen to allow customers to sign on the screen. CRA stated:
[T]he PDA qualifies as "general-purpose electronic data processing equipment" and therefore qualifies for inclusion in Class 52 if all the other conditions of that Class are otherwise satisfied.
7 September 2010 External T.I. 2009-0340861E5 F - Déduction pour amortissement - Catégorie 52
Is a Pulstar MIT (Multiple Impulse Therapy) device (described as a computer with a head that allows repeated pulses to be used by chiropractors to analyze spinal mobility and treat blockages that are detected) a Class 52 property?
After quoting from the definition of "general-purpose electronic data processing equipment" including the requirement that there be “an internally stored computer program that … can be altered by the user of the equipment,” CRA stated that given that there was “no indication that the user of the property can modify the computer program stored therein,” the device did not appear to qualify.
17 August 2000 External T.I. 2000-0029745 F - Amortissement-Equipememnt lazer epilation
In concluding that laser hair removal equipment (the “Device”) did not constitute “general-purpose electronic data processing equipment,” CCRA stated:
[E]ven if the user of the Device can change the software, we doubt that the user can change the computer program or programs underlying the software.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Regulations - Schedules - Schedule II - Class 8 | laser hair removal equipment included in Class 8 (not general-purpose electronic data processing equipment) | 48 |
Gas or Oil Well Equipment
See Also
Terroco Industries Ltd. v. MNR, 93 DTC 1, [1993] 1 CTC 2614 (TCC)
A 10-wheel truck which had been especially adapted for the purpose of serving as an integral part of a hot oil unit used for heating oil and pumping it under pressure into wells in order to melt paraffin accumulations could not be considered to have been "designed for use in highways or streets" (Regulation 4600(2)(e)) and instead was "equipment ... used in a gas or oil field in the production therefrom of natural gas or crude oil" (definition of "gas or oil well equipment" in Regulation 1104(2)).
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Regulations - Regulation 4600 - Subsection 4600(2) | 87 |
Thermal Waste
Administrative Policy
29 December 2014 External T.I. 2014-0547911E5 - FTS renunciations
Would a particular application in a "waste heat to power project" qualify as a Class 43.1 cost so that it would also qualify as "Canadian renewable and conservation expense" in Reg. 1219? After referring to the "thermal waste" definition in Reg. 1104(13), CRA stated:
the waste heat energy extracted from a calcination system which would otherwise be vented to the atmosphere should qualify as "thermal waste".
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Regulations - Regulation 1219 - Subsection 1219(1) | abandonment after feasibility study | 138 |
Subsection 1104(4)
Administrative Policy
16 June 2022 External T.I. 2019-0819951E5 - AIIP - renovations to property
A renovation or alteration is made to a depreciable property, originally acquired in a taxation year ending prior to November 21, 2018, that does fall under Class 54 ,55 or 56, and that will be available for use before 2028. Capital cost allowance (“CCA”) was deducted in a taxation year ending before the renovation or alteration was made.
Would the renovation or alteration be considered accelerated investment incentive property (“AIIP”)?
In finding that Reg. 1104(4)(a) was satisfied, CRA stated that it:
considers there to have been an acquisition of property when there is an alteration or renovation to a particular depreciable property, even if this alteration or renovation represents an addition to an already existing property.
In also indicating that Reg. 1104(4)(b) would generally be deemed by Reg. 1104(4.1) to be satisfied, provided that “no CCA or terminal loss had been deducted in respect of the alteration or renovation by any person or partnership for a taxpayer year ending before the property was acquired by the taxpayer,” so that the renovation or alteration would generally be expected to qualify as AIIP, CRA stated:
Where CCA or terminal loss amounts have been deducted in respect of the depreciable property in a taxation year prior to the alteration or renovation to the property, subparagraph 1104(4.1) may deem the amounts to have been deducted in respect of a separate property that is not part of the of the particular depreciable property. Subsection 1104(4.1) will apply when the amounts deducted for CCA or a terminal loss can reasonably be considered to have been deducted in respect of amounts for acquisitions incurred either before November 21, 2018, or incurred after November 20, 2018, if any portion of the particular property is considered to have become available for use before the time that the particular property is first used for the purpose of earning income.
Paragraph 1104(4)(a)
Administrative Policy
2021 Alberta CPA Roundtable under "Accelerated Investment Incentive"
Enhanced first-year capital cost allowance claims were available on assets acquired after November 20, 2018 and that became available for use before 2028, under the accelerated investment incentive (AII). How was this test to be applied to assets which were under construction on November 20, 2018? CRA responded:
Where a building (or other structure) is being erected by or for a taxpayer on land owned by the taxpayer, they are considered to have acquired a building (or other structure), at any particular time, to the extent of:
- the construction costs incurred by the taxpayer to that time, including the cost to the taxpayer of materials that have been put in place, but not including holdbacks that constitute a conditional liability (for example, a holdback which requires that the work be approved by the taxpayer’s architect or engineer before payment), or
- progress billings received by the taxpayer to that time, net of any holdbacks that constitute a conditional liability.
Accordingly, where the construction of a building straddles November 20, 2018, there will be, generally speaking, two components of the building for the purpose of the AII:
- the portion of the building (i.e. the construction costs) acquired before November 21, 2018; and
- the portion acquired after November 20, 2018.
Only the portion of the building acquired after November 20, 2018 will be eligible for the AII (provided it becomes available for use before 2028).
Subsection 1104(5) - Mining
Paragraph 1104(5)(a)
See Also
ATCO Electric Ltd. v. The Queen, 2007 DTC 974, 2007 TCC 243
The Court rejected the position of the Crown that the furthest point at which sub-bituminous coal was not beyond its equivalent of the prime metal stage was when it was placed on the reclaim pile, just after having gone through the primary crusher, and accepted the position of the taxpayer that this point was reached later in the crushing process when the coal had been pulverized, just before being introduced as fuel into the generation stations' combustion chamber to manufacture electricity.
Subsection 1104(9) - Manufacturing or Processing
Paragraph 1104(9)(a)
Administrative Policy
19 November 2013 External T.I. 2013-0510351E5 - Steel Tanks and Oak Barrels of a Winery Business
The taxpayer in 2013-0503311E5 carried on a wine-making business that involved both farming activities (i.e., growing grapes) and non-farming activities (i.e., producing wine for sale). Its fermentation tanks and barrels were considered to likely qualify for class 29 purposes as property used primarily in the manufacturing or processing of goods for sale. In clarifying that the exclusion in Reg. 1104(9)(a) of "farming" from "manufacturing or processing" did not apply, CRA stated:
[A] farmer or a farming corporation may carry on activities that, if carried on by another person, would be considered to be processing of farm products rather than farming. Some examples are: aging of cheese, plucking of chickens, cleaning, polishing and treating of beans, or cleaning sorting, grading and spraying of eggs. …[F]arming does not include the manufacturing or processing of agricultural products unless such activities are incidental to the farming activity. …[G]enerally where a farmer or farming corporation separates the activities of farming and the processing of farm products, the CRA will essentially consider the processing activity to be a distinct business from that of farming provided that there is a clear delineation of the income from each business activity, and that the income from the processing business is properly calculated and is not eligible for any of the special sections in the Act dealing with income from a farming business (such as the cash method of computing income in section 28…).
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Farming | wine fermentation not farming | 247 |
| Tax Topics - Income Tax Act - Section 4 - Subsection 4(1) - Paragraph 4(1)(a) | grape farming and wine production separate | 173 |
| Tax Topics - Income Tax Regulations - Schedules - Schedule II - Class 29 | wine fermentation not processing | 174 |
Paragraph 1104(9)(c)
Cases
Nova Construction Co. Ltd. v. The Queen, 85 DTC 5594, [1986] 1 CTC 68 (FCA)
The taxpayer's "blackmobile" which produced asphaltic concrete which was used by the taxpayer to pave roads at various distances from the blackmobile, was held to be used in the taxpayer's construction business.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.1 - Subsection 125.1(3) - Manufacturing or Processing - Paragraph (c) | 123 |
See Also
Excavations Marchand et Fils Inc. v. Agence du revenu du Québec, 2025 QCCQ 378
The taxpayer (“EMF”), which was a construction company engaged in large civil engineering projects such as roads, bridges and natural gas networks, contracted with Hydro-Quebec (“HQ”) for the furnishing, installation and operation of an on-site portable concrete-producing facility for the provision of the concrete in the installation of a large hydro-electric dam at a remote location. Trudel JCQ found that such contract should be characterized as for the manufacturing of goods (the concrete) for sale, rather than as a contract of service, given that the predominant intention was to provide for the supply of cement to Hydro-Quebec.
In further finding that the exclusion from a manufacturing operation for “construction” did not apply, he stated (at para. 75, TaxInterpretations translation):
The Court finds the following from the relevant evidence:
- EMF used the ice machine and silos exclusively for the operation of the portable concrete plant and they were therefore of no use to the company's other business lines;
- The concrete produced was sold almost entirely to third parties, primarily to HQ as part of the Romaine 3 and 4 hydroelectric power plant construction projects;
- With a few exceptions, EMF did not use the concrete produced in its other construction business lines;
- The portable plant was moved according to customer needs;
- With rare exceptions, the employees who operated the concrete plant had specific skills and were generally not assigned to the company's other operations;
- The company maintained separate accounting records to determine the respective revenues and expenses of its construction activities and those of its concrete manufacturing and sales.
Accordingly, an ice maker and silos used in the operation qualified as Class 29 property that was qualified property for Quebec investment tax credit purposes.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Regulations - Schedules - Schedule II - Class 29 | contract with detailed specs for provision of concrete, produced by a portable facility at the site of dam construction, was a contract of sale rather than of service | 265 |
Pavages Vaudreuil Ltée v. Agence du revenu du Québec, 2021 QCCQ 3890
In addition to being involved in construction (maintenance of roads, streets and bridges), the taxpayer (“PVL”) owned several natural gravel quarries and sand pits and processed sand, river gravel, crushed stone and earth.
PVL purchased three pieces of equipment (a wheel loader, compact excavator, and hydraulic thumb) and used them exclusively for the handling of materials already gathered by a cable shovel in connection with the washing, sorting and crushing of the various products intended either for sale (as to about 73% of the products) or for use by PVL (as to the balance).
In order for the purchases to have generated an investment tax credit for Quebec purposes, they were required inter alia to qualify as Class 29 property, i.e., property acquired by it to be used primarily in the manufacturing or processing of goods for sale. Under Reg. 130R12(c) and (e) (the Quebec equivalent of ITA Regs. 1104(9)(c) and (e)), “manufacturing or processing” was deemed to exclude “construction” and “extracting minerals from a mineral resource.” After finding that the para. (e) exclusion did not apply, and in now also finding that the para. (c) exclusion also did not apply because PVL’s construction and processing operations were distinct, Bourgeois JCQ noted that the operations’ respective customers differed, the processing occurred at sites distinct from the situs of the construction projects, only 26.67% of the processed product was used in the construction operation and, indeed, the two operations could have been operated independently of each other, and there was separate accounting. The appeal was allowed.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Regulations - Regulation 1104 - Subsection 1104(9) - Paragraph 1104(9)(e) | operation of washing, sorting and crushing aggregate was separate from operation of extracting the aggregate | 264 |
| Tax Topics - Income Tax Act - Section 4 - Subsection 4(1) - Paragraph 4(1)(a) | an operation of washing, sorting and crushing aggregate was separate from a road construction operation | 216 |
Paragraph 1104(9)(e)
See Also
Pavages Vaudreuil Ltée v. Agence du revenu du Québec, 2021 QCCQ 3890
In addition to being involved in construction (maintenance of roads, streets and bridges), the taxpayer (“PVL”) owned several natural gravel quarries and sand pits and processed sand, river gravel, crushed stone and earth.
PVL purchased three pieces of equipment (a wheel loader, compact excavator, and hydraulic thumb) and used them exclusively for the handling of materials already gathered by a cable shovel in connection with the washing, sorting and crushing of the various products intended either for sale (as to about 73% of the products) or for use by PVL (as to the balance).
In order for the purchases to have generated an investment tax credit for Quebec purposes, they were required inter alia to qualify as Class 29 property, i.e., property acquired by it to be used primarily in the manufacturing or processing of goods for sale. Under Reg. 130R12(c) and (e) (the Quebec equivalent of ITA Regs. 1104(9)(c) and (e)), “manufacturing or processing” was deemed to exclude “construction” and “extracting minerals from a mineral resource.” In finding that the para. (e) exclusion did not apply, and before going on to find that the para. (c) exclusion also did not apply, Bourgeois JCQ stated (at para. 44, TaxInterpretations translation):
The acquired goods were used exclusively for the handling of materials already collected by the cable excavator, in the context of operations necessary for washing, sorting and crushing and then stacking the various products intended either to be sold to third parties (as to 73.3%) or to be used by the plaintiff (as to 26.67%) … .
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Regulations - Regulation 1104 - Subsection 1104(9) - Paragraph 1104(9)(c) | operation of washing, sorting and crushing aggregate was separate from a road construction operation in which 27% of the product was used | 263 |
| Tax Topics - Income Tax Act - Section 4 - Subsection 4(1) - Paragraph 4(1)(a) | an operation of washing, sorting and crushing aggregate was separate from a road construction operation | 216 |
Subsection 1104(12) - Amusement Parks
Administrative Policy
17 November 1997 External T.I. 9722345 - AMUSEMENT PARK DEFINITION
Although an amusement park is usually found outdoors, it is possible for it to be contained inside a building.
"Although three types of activities are described in the definition ... in our view, the word 'and' in amusement, rides and audio-visual attractions' is a joint and several 'and', such that it is not required that all three activities be permanently situated in a park in order for the place to qualify as an amusement park."
Tennis courts, golf courses and fishing ponds are likely to qualify as property used in connection with an amusement park. A miniature golf course potentially may qualify.
Subsection 1104(13) - Classes 43.1 and 43.2 — Energy Conservation Property
Eligible Waste Fuel
Administrative Policy
11 May 2009 External T.I. 2008-0276761E5 F - Class 43.1 and 43.2
In the course of describing how a wood waste fuelled heat production system and ground source heat pump might qualify for inclusion in Class 43.2, CRA stated:
According to NRCan, wood pellets are "wood waste" for the purposes of the definition of "eligible waste fuel" … .
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Regulations - Schedules - Schedule II - Class 43.1 | wood waste fuelled heat production system and ground source heat pump likely could qualify | 388 |
Wood Waste
Administrative Policy
24 June 2024 External T.I. 2023-1000061E5 - Meaning of "wood waste"
Does “wood waste” include waste generated from (i) forestry operations, including slash piles, (ii) provincially/territorially regulated forest management activities that support improving the health of forest stands and forest fire resiliency (e.g., residues from stand thinning, salvaged wood from fire/pest affected stands, residues from fire smarting), and (iii) construction and demolition activities.
CRA first stated:
[T]here is no inherent limitation to the activity or process from which the waste is generated.
After going on to refer to Dictionary definitions of “wood” and “waste,” it concluded:
[I]t appears as though “wood waste” would generally mean an unwanted material or by-product that would otherwise be discarded and that consists of the substance that is found in parts of trees, shrubs, etc. …
[M]aterial salvaged from each of the activities outlined above could be captured by the definition of “wood waste” … provided that it is waste and that it has maintained its physical and chemical properties of wood.
6 July 2012 External T.I. 2012-0444401E5 - Definition of “wood waste” in Class 43.2
In response to a question as to whether forest biofibre (as defined in the Forest Resources Disposition Directive of the Ontario Ministry of Natural Resources, and including cull and salvage trees, and stands of unmerchantable trees) qualified as wood waste, CRA stated:
Generally...wood waste is considered to be a by-product of activities directly associated with the forest industry and the manufacture of wood product and does not include plants grown solely for the purpose of combustion to produce heat or electrical energy....
In the summary, it indicated that not all biofibre would be wood waste.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Regulations - Schedules - Schedule II - Class 43.1 | 42 |
Subsection 1104(23)
Administrative Policy
1 May 2008 External T.I. 2008-0271891E5 F - Bâtiment non résidentiel
In the course of a general discussion, CRA noted that a taxpayer who acquires an addition or alteration to a building that is not an eligible non-residential building (e.g., because it was acquired before March 19, 2007) may be entitled to the additional CCA in respect of the capital cost of the addition or alteration if the other conditions applicable to the additional deduction under these provisions are satisfied.