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.
MINISTER/DEPUTY MINISTER'S OFFICE 95-07216M
ADM'S OFFICE
RETURN TO 15TH FLOOR, ALBION TOWER
November 16, 1995
XXXXXXXXXX
Dear XXXXXXXXXX:
The Honourable David Anderson, Minister of National Revenue, has asked me to reply to your letter of September 22, 1995, concerning tax policies relating to the renovation or restoration of heritage buildings.
The Department of National Revenue is responsible for applying the provisions of the Income Tax Act as enacted by Parliament. This responsibility includes determining the current deductibility or the capitalization of expenditures on real property.
There is a large body of case law that has been developed around the issue of current versus capital treatment for expenditures on repairs and renovations. However, because any determination of this type requires an examination of the particular facts of each case, it is not possible to establish fixed rules for all expenditures.
Nevertheless, the Department has published guidelines in Interpretation Bulletin IT-128R, Capital Cost Allowance - Depreciable Property, which sets out the most important factors to be considered in making this type of determination. The bulletin is based on a number of court decisions, and I believe that it continues to be a useful guide in determining the proper tax treatment of expenditures on real property. I have enclosed a copy of the bulletin for your information.
Amending the annual capital cost allowance rates and including incentives in the Income Tax Act are tax policy issues which fall within the purview of the Department of Finance. I have therefore forwarded a copy of our correspondence to Mr. David Dodge, Deputy Minister, Department of Finance, so that he will be made aware of your concerns regarding tax policy issues.
I wish to thank you for bringing your views to our attention.
Yours sincerely,
Pierre Gravelle, Q.C.
Attachment
C.C. Mr. David Dodge
Deputy Minister
Department of Finance
A.M. Brake
957-2133
October 20, 1995