Principal Issues: [TaxInterpretations translation] Does a personal digital assistant qualify as general-purpose electronic data processing equipment?
Position: Yes, if all other conditions of Class 52 are satisfied.
Reasons: A personal digital assistant appears to satisfy the definition of "general-purpose electronic data processing equipment”.
XXXXXXXXXX 2009-034747 Anne Dagenais, Advocate, M. Fisc. July 27, 2010
Dear Madam,
Subject: Capital Cost Allowance - Class 52
This is further to your email of November 10, 2009, in which you requested our opinion as to whether property such as a personal digital assistant (PDA) can be included in Class 52 of Schedule II to the Income Tax Regulations (the "Regulations").
Unless otherwise indicated, all legislative references herein are to the provisions of the Income Tax Act (the "Act").
More specifically, the property in question is a device whose operating software is created by a company to meet its specific requirements. According to your description, the PDA is acquired from an external supplier and communicates to a trucker a series of deliveries or pick-ups of XXXXXXXXXX. This device works with cellular waves and is connected to a central XXXXXXXXXX.
In addition to this software, the PDA can be used as a phone or for GPS, to receive and send e-mails and to access the Internet. It can also be used to take photos (in the event of property damage during deliveries or pick-up of goods) which are transmitted to the central office. Finally, it seems that the device replaces the paper usually used by truckers. The PDA includes a touch screen, a detachable pen to allow customers to sign on the screen, an appointment calendar and a listing for the day's route. Finally, these devices are equipped with a barcode reader.
Our Comments
It appears to us that the situation described in your letter and summarized above could constitute an actual situation involving taxpayers. As explained in Information Circular 70-6R5, it is not the practice of this Directorate to provide comments on proposed transactions involving specific taxpayers otherwise than in the form of an advance income tax ruling. If your situation involved specific taxpayers and one or more transactions, you should submit all relevant facts and documentation to the appropriate tax services office for its opinion. However, we can offer the following general comments that may be helpful.
Consideration as to which particular class in Schedule II to the Regulations a depreciable property falls into is a question of fact that can only be determined after an examination of all the relevant facts of a particular situation.
Subject to certain conditions, property acquired by a taxpayer after January 27, 2009 and before February 2011 that is included in Class 52 of Schedule II to the Regulations is eligible for capital cost allowance ("CCA") at a rate of 100% on a declining balance basis. Class 52 applies to general-purpose electronic data processing equipment subject to the exceptions in subparagraphs (a)(i) to (iv) of that class.
Subsection 1104(2) of the Regulations defines, among other things, the term "general-purpose electronic data processing equipment". The definition "general-purpose electronic data processing equipment" is:
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; …
In this case, we are of the view that the 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.
These comments do not constitute an advance income tax ruling and are not binding on the CRA in respect of any particular factual situation.
We hope that the above comments will be of assistance and will be able to answer your questions.
Best regards,
François Bordeleau, Advocate
Manager
Business and Partnerships Section
Income Tax Rulings Directorate.