Principal Issues: Whether an advanced GNSS receiver and GPS equipment used in the construction, engineering and land surveying industry is included in Class 52.
Position: No
Reasons: While it is a question of fact, such property is a special purpose electronic device never explicitly included in any other class. Such property would generally fall into class 8.
XXXXXXXXXX 2011-042511 S. D'Angelo (613)952-5803
December 6, 2011
Dear XXXXXXXXXX :
Re: Capital Cost Allowance (CCA) Class of GPS Equipment
This is in response to your correspondence of October 21, 2011 concerning the classification of certain equipment for CCA purposes. We understand that the equipment (Sokkia GSR2700 ISX) is generally used in the construction, engineering and land surveying industries. A review of the brochure you provided indicates that the GSR2700 ISX is an advanced Global Navigation Satellite System (GNSS) receiver that features a fully integrated high performance receiver with Global Positioning System (GPS) plus Real Time Kinematic (RTK) performance, multiple Bluetooth connectivity, voice messaging and an LED display panel which provides status indicators for satellite tracking, battery life, remaining memory, occupation time and communications.
You are of the view that this equipment belongs in Class 52 and are requesting our view on this.
Our Comments
The determination of the proper CCA classification of a particular device is a question of fact. Factors to be considered will include not only the specific functions that the device is designed to perform but also, amongst other things, the actual use to which the device has been put by the particular taxpayer. This determination would generally be made by the local Tax Services Office having regard to all the relevant facts relating to the specific taxpayer. However, we offer the following comments.
Class 52 generally provides for a 100% CCA rate for property acquired by a taxpayer after January 27, 2009 and before February 2011 that is general-purpose electronic data processing equipment (GPEDPE) and systems software for that equipment, including ancillary data processing equipment that:
(a) is situated in Canada;
(b) has not been used, or acquired for use, for any purpose whatever before it was acquired by the taxpayer; and
(c) is acquired by the taxpayer either
(i) for use in a business carried on by the taxpayer in Canada or for the purpose of earning income from property situated in Canada; or
(ii) for lease by the taxpayer to a lessee for use in a business carried on by the lessee in Canada or for the purpose of earning income from property situated in Canada.
However, class 52 does not include property that is principally or is used principally as electronic process control or monitor equipment (including related system software), electronic communications control equipment (including related system software), or data handling equipment (other than such equipment that is ancillary to general-purpose electronic data processing equipment).
GPEDPE is defined in subsection 1104(2) of the Regulations as electronic equipment that, in its operation, requires an internally stored computer program that:
(a) is executed by the equipment;
(b) can be altered by the user of the equipment;
(c) instructs the equipment to read and select, alter or store data from an external medium such as a card, disk or tape; and
(d) depends upon the characteristics of the data being processed to determine the sequence of its execution.
An example of GPEDPE would be a desktop PC or laptop computer.
The GSR2700 ISX appears to be a special-purpose electronic device and is unlike general-purpose electronic equipment such as a laptop computer. In our view, the GSR2700 ISX does not appear to be property included in class 52 nor does it appear to be property that would be specifically described in any other class. As such, it is our view that such property is tangible capital property that would be included in Class 8(i), which has a CCA rate of 20%.
We trust our comments will be of assistance.
Yours truly
Michael Cooke
Manager
Business and Trusts Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch