Into what class does a railway system acquired before 1958 by a corporation with a railway business fall? After assuming that the corporation was a “common carrier” (as referenced in Reg. 1104(2)), which CRA described as “a person who carries on the business of providing, for consideration, a service of transporting property or persons from one place to another and who generally offers its services to the public,” CRA stated:
[P]roperty described in subparagraph (h)(ii) of Class 1 …, that is, property acquired after May 25, 1976, may be included in a railway system.
By virtue of paragraph (a) of Class 4 … property that would otherwise be included in another class in Schedule II, consisting of a railway system or part thereof, except automotive equipment not designed to run on rails or tracks, that was acquired after the end of the taxpayer’s 1958 taxation year and before May 26, 1976, is to be included in that class.
After reviewing the history and overall context of the regulatory provisions dealing with the capital cost allowance of assets in the railway industry, it is our opinion that the post-1958 year-end acquisition test in paragraph (a) of Class 4 … should relate only to non-railway automotive equipment.
… [Thus] a railway system acquired prior to 1958 is depreciable property that falls within Class 4 … .