8 December 1999 External T.I. 9905505 - AVAILABLE FOR USE

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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues: when is property available for cca

Position: available for use rules

Reasons: 13(27)

XXXXXXXXXX 990550
S. Tevlin
Attention: XXXXXXXXXX

December 8, 1999

Dear Sirs:

Re: Rental Equipment

We are writing in response to your letter dated February 24, 1999 wherein you requested our comments with respect to the capitalization of certain equipment.

The situation described in your letter involves an actual fact situation of a specific taxpayer. Written confirmation of the tax implications inherent in proposed transactions are given by this Directorate only where the transactions are the subject of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R3 ("IC-70-6R3"), dated December 30, 1996. For a completed transaction, you should submit all relevant facts and documentation to your local tax services office for their views.

However, we are prepared to offer the following general comments.

Where a depreciable property has been acquired and is "available for use", as that term is described in subsection 13(27) of the Income Tax Act (the "Act"), in the earning of income from a business, its cost can be added to the undepreciated capital cost of property of that particular class for purposes of claiming capital cost allowance pursuant to 20(1)(a) of the Act, notwithstanding that the property may be subsequently modified or have additions made thereto. We enclose copies of Interpretation Bulletin IT-128R entitled Capital cost allowance - Depreciable property, and IT-285R2 entitled Capital cost allowance - General comments, which contain general information on claiming capital cost allowance on depreciable property.

We also note that where the property is used principally for the purpose of producing gross revenue that is rent, royalty or leasing revenue, it will be subject to the "leasing property rules" pursuant to Regulation 1100(15) of the Income Tax Regulations. In this regard we enclose a copy a Interpretation Bulletin IT-443 entitled Leasing property - capital cost allowance restrictions.

Should you have any questions regarding the subject matter of these publications please contact the writer.

The foregoing comments are given in accordance with the practice referred to in paragraph 22 of IC-70-6R3 and are not binding on the Canada Customs and Revenue Agency.

We trust our comments will be of assistance to you.

Yours truly,

Paul Lynch
for Director
Resources, Partnerships and Trusts Division
Income Tax Rulings and Interpretations Directorate
Policy and Legislation Branch

Att.

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