Chris Higgins (613) 957-2097 FEB 5 1988
Dear Mr. XXXX
We are writing in response to your letter dated December 8, 1987 concerning the tax implications to you of a car won by yourself in a 1984 lottery. As we understand it, the car was initially used only for personal purposes until 1986 at which time you commenced to use the car partly for business purposes. Based on the information provided, we have assumed the car's value has declined during this period.
When you received the car in 1984 from Lotto 50, subsection 69(1)(c) of the Income Tax Act deems you to have acquired the car at its fair market value at that time. This deemed fair market would also be the car's cost for tax purposes.
In 1986, when you commenced to use the car partially for business purposes, paragraph 13(7)(b) of the Income Tax Act deems you to have acquired the car for its fair market value at that time. This deemed fair market value will be the amount used for determining the appropriate amount of capital cost allowance which you will be entitled to for tax purposes. Also, this fair market value will also be relevant for purposes of calculating future recaptured depreciation and any capital gain resulting from a subsequent disposition of the car.
These comments represent our opinion of the law as it applies generally. As indicated in paragraph 24 of Information Circular 70-6R, dated December 18, 1978, this opinion is not a ruling and accordingly, it is not binding on Revenue Canada, Taxation.
Original signed by
XXXX
for Director Small Business and General Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch