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.
Principal Issues: can a multi cab truck not be subject to $26,000 limit
Position: no only certain exceptions
Reasons: law
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Dear XXXXXXXXXX:
Thank you for your letter of April 13, 1999, wherein you expressed certain concerns with respect to the definition of automobile as that term is used for the purpose of calculating capital cost allowance in Schedule II of the Income Tax Regulations.
In particular you note that extended cab multi-passenger vehicles that are used to transport farm workers are considered equivalent to an automobile and are therefore restricted to a maximum capital cost amount for purposes of the Regulations. As an alternative, you suggest that if such multi passenger pick-up trucks are to be considered passenger vehicles they should not be limited to the current capital cost amount of $26,000.
A passenger vehicle as defined in subsection 248(1) of the Income Tax Act "means an automobile". The definition of automobile as contained in subsection 248(1) of the Act would otherwise include a regular or extended cab truck unless it fell within one of the exceptions set out in paragraphs (b) through (e). Subparagraph (e)(i) deals with a van or regular pick-up truck that seats a driver and not more than two passengers and contains a primary use test. Subparagraph (e)(ii) deals with a van or pick-up truck or a similar vehicle “the use of which, in a taxation year in which it is acquired, is all or substantially all for the transportation of goods, equipment or passengers in the course of gaining or producing income." The subparagraph (e)(ii) exception does not contain a seating restriction but the use requirement is more onerous in that "all or substantially all" is considered to be more than 90% of all the use made of the vehicle.
It is Revenue Canada's view that the extended cab trucks are considered to have seating capacity for more than the driver and two passengers and it will, therefore, be a determination of fact based on the use of each particular extended cab truck, in the year it was acquired, whether that vehicle fits within the subparagraph (e)(ii) exclusion in order that it not be considered a passenger vehicle that falls within class 10.1 for capital cost allowance purposes.
The government annually reviews the ceiling on the capital cost of passenger vehicles and announces any changes prior to the end of the calendar year so businesses are aware of the rules in advance of the start of the calendar year in which they apply.
Any changes to the rules governing capital cost allowance would require a change in policy and an amendment to the Act. Since tax policy issues and amendments to the legislation are the responsibility of the Department of Finance, they would have to be considered by that Department. In this regard, I have forwarded a copy of your letter and our correspondence to the Honourable Paul Martin, Minister of Finance, for his consideration.
I trust that these comments will be of assistance.
Yours sincerely,
Herb Dhaliwal, P.C., M.P
c.c. The Honourable Paul Martin, P.C., M.P. Minister of Finance
Steve Tevlin 957-2093
991407
June 3, 1999