Words and Phrases - "related"

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16 May 2017 External T.I. 2016-0670661E5 - Capital Cost of De-icing Equipment

ice-melting shingles beneath solar equipment likely “related” to such equipment and not an accession to the building

New aluminum shingles with an electric cable (the “Equipment”) will be attached over existing asphalt shingles on the portion of a roof immediately beneath existing solar panels (which satisfy the conditions of s. (d)(vi) of Class 43.1)), so as to melt snow accumulations, which otherwise would hinder the functioning of the solar panels.. Would the cost of the Equipment be eligible for inclusion in Class 43.2?

After noting other more general requirements for the claiming of capital cost allowance, CRA stated:

Generally, if something is “related to” a particular subject it concerns that subject. … Thus, if the Equipment is necessary for the proper functioning of the existing photovoltaic equipment, it would likely be considered to be “related equipment”… .

…The test [of whether the Equipment is a fixture] asks whether an article is attached to another property to effect a permanent and substantial improvement of that other property or to enable more complete enjoyment and use of the first article. … In a situation where there is a dual or multiple purposes, the courts have considered what the dominant purpose of the annexation is [citing Hansen, 1998 ABQB 1103].

Here, the intention to install the Equipment is to resolve a problem caused by the deficient operation of the solar panels. Thus, the fact that the Equipment is necessary for the proper operation of the photovoltaic equipment during the winter period and that its main function is to support the solar panels (with any benefits to the building being negligible), may support the inclusion of its capital cost to Class 43.2… .

Words and Phrases
related fixture