MINISTER/DM'S OFFICE Y.S. 93-3046T ADM'S OFFICE CENTRAL RECORDS RETURN TO RULINGS, ROOM 303, MET. BLDG.
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Dear XXXXXXXXXX
The Honourable Otto Jelinek, Minister of National Revenue, has asked me to respond to your letter of March 18, 1993, which was forwarded by the Honourable Don Mazankowski, Minister of Finance, on May 13, 1993, concerning small business investment tax credits (the "SBITC") on farm equipment purchases.
In your letter you expressed concern with respect to the administrative treatment under the SBITC provisions of farm machinery and equipment that has been the subject of regular demonstrations or used for rentals.
The Department's view on "demonstrators" and demonstration is set out in paragraph 18 of the enclosed Interpretation Bulletin IT-331R and would be equally applicable to the SBITC. Regrettably, the wording in the SBITC legislation does not allow a similar interpretation to extend to equipment used for rental. It is our view that equipment used to earn rental revenue, regardless of the length of the rental arrangement, has been "used for a purpose", namely to earn rental revenue. Consequently, such equipment cannot qualify for the SBITC if it is subsequently sold to a farmer.
I regret that my reply cannot be more favourable. Nevertheless, I trust that my comments have explained the Department's position on this matter.
Yours sincerely,
Pierre Gravelle, Q.C.
c.c. Mr. David A. Dodge Deputy Minister Department of Finance
June 15, 1993