MAR - 9 1989 R. B. Day (613) 957-2136
Dear XXXX
We are writing in reply to your letter of February 15, 1989, wherein you requested our view as to whether or not motor homes acquired by your company in 1988 for rental to the general public, would be included in Class 16(e) of Schedule II to the Income Tax Regulations (the "Regulations") for capital cost allowance ("CCA") purposes.
In this regard, you have advised that your largest motor home has seat belts for eight people and that the average distance travelled per motor home was 35,000 kilometers.
Our Comments
It is our opinion that the motor homes acquired by your company in 1988 would not qualify for inclusion in Class 16(e) of Schedule II to the Regulations. The reasons for our view are as follows:
In order to qualify for inclusion in Class 16(e) the motor homes must fall squarely within the wording of that paragraph. Class 16(e) refers to "property acquired after November 12, 1981 that is a passenger automobile acquired for the purpose of renting or leasing and that is not expected to be rented or leased to any one person for more than 30 days in any 12 month period."
Although "passenger automobile" is not specifically defined for purposes of the Income Tax Act, subsection 248(1) defines "automobile" in part, as follows:
"automobile means"
(a) a motor vehicle that is designated or adapted primarily to carry individuals and their personal luggage and that has a seating capacity for not more than the driver and 8 passengers."
Although your letter was silent as to the length of time the motor homes were rented or leased to any one individual, it would appear that motorhomes are designed primarily as recreational vehicles to provide a "home away from home" for persons while they are vacationing. As a consequence it is our view that a motorhome would not meet the definition of an "automobile" as defined in subsection 248(1) and by extension would not qualify as a "passenger automobile" for purposes of Class 16(e).
In view of the above, it is our opinion that the motorhomes would be included in Class 10(a) of Schedule II to the Regulations, for CCA purposes.
We trust that this will be of assistance to you.
Yours truly,
for Director Small Business and General Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch