Equipment was acquired by a corporation (“Aco”), wholly-owned by a dental surgeon, to manufacture dental restorative products for use as part of its dental services.
Alternatively, the surgeon incorporated and wholly-owned a second corporation (“Bco”), which acquired the equipment and sold, to Aco, the dental restorative products it manufactured using the equipment.
CRA indicated that the first alternative did not satisfy the requirement in the Class 29 description (which was required in order for the equipment to qualify as Class 53 equipment) that the equipment be property used directly or indirectly in Canada primarily in the manufacturing or processing of goods for sale or lease. In particular, the equipment would not be Class 53 property since Aco used the dental restorative products, that it manufactured using the equipment, in the course of providing a dental service.
Under the second alternative, assuming that there indeed was a sale of the manufactured products by Bco to Aco under the governing provincial law (here, Quebec), the equipment could qualify as Class 53 property to Bco assuming that the other Class 53 requirements were satisfied.