Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
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:
mobile office built into minivan - capital cost and CCA queried
Position TAKEN:
likely 10.1 asset, cost exclusive of office equipment installed as equipment not an integral part of the automotive equipment. As an employee, CCA on vehicle can be claimed but not for equipment. Cost of supplies consumed directly may be deducted if usual requirements met.
Reasons FOR POSITION TAKEN:
equipment is removeable. Van will likely meet def'n of passenger vehicle once purchased.
940187
XXXXXXXXXX Sandra Short
April 6, 1994
Dear XXXXXXXXXX:
Re: Depreciation on "Mobile Office" for use by Commissioned Salesperson
This is in reply to your letter of January 20, 1994 and further to our telephone conversation of February 21, 1994 (XXXXXXXXXX/Short). You have queried the rate of depreciation to be used for a "mobile office" (described below) to be used by you in performing the duties of office or employment. You are a commissioned salesperson employed to sell XXXXXXXXXX and are in receipt of an automobile allowance from your employer. This allowance is included in your employment income and you are eligible to deduct travelling and other expenses that may be claimed by commissioned salespersons. The "mobile office" is described as:
1.A full size van, to be owned by you, modified to contain office equipment such as a desk, chairs, a computer, facsimile machine, telephone and so forth. It is your intention that all equipment be "removable" from the van; that is, it will not be designed to remain in or on the vehicle in any reasonably permanent manner.
2.The van will be used primarily to travel to clients' places of business. The van will sometimes also be used to deliver customer parts to them.
3.It is your estimate that the cost of the van and its "office" contents will not exceed $50,000.
As you may be aware, the terms "passenger vehicle", "automobile" and "motor vehicle" have particular meaning for the purposes of the Income Tax Act. It would appear that the asset described by you above is a passenger vehicle and as such is a class 10.1 asset (capital cost allowance rate of 30 per cent). The special rules applicable to passenger vehicles are discussed in the enclosed "Employment Expenses" guide. You may wish to review the comments on page 15 of the guide and in particular, the chart found on page 16.
It is our view that the existence of an "office" or office equipment in the back of a motor vehicle does not result in a finding that the vehicle is used for the purpose of "transporting goods or equipment in the course of gaining or producing income". The movement of the office equipment and furniture (by virtue of the fact that it is located inside a mode of transportation) is not for the purpose of transporting or delivering goods, equipment or passengers but simply for the convenience and availability of same equipment for use by you when working from different work locations such as clients' places of business. It is our view that the use of the vehicle would be primarily, or all or substantially all, for the purpose of transporting you from one location to another.
The equipment that comprises an office (desk, computer, facsimile machine and so forth) is usually depreciable property of one class or another. While a self employed individual may include these items in the appropriate class for capital cost allowance purposes and depreciate the items at the rate assigned to each class of property, a commissioned sales employee is restricted to claiming capital cost allowance in respect of a "motor vehicle" (includes a passenger vehicle) and an "aircraft" only.
It is necessary to establish the capital cost of the vehicle and of the equipment to be placed in the vehicle's "office". It is the Department's general view that when equipment is attached to an automotive chassis in such manner that it becomes an integral part of the automotive equipment, that the asset be classified according to the carrying component. That is, if the equipment is an integral part of the vehicle, the entire vehicle would normally be classified in class 10 or 10.1. Given the situation described by you (in 1. above), the capital cost of the vehicle would be exclusive of the cost of office equipment and technology to be placed in the vehicle. As discussed above, as an employee you would be precluded from claiming any capital cost allowance in respect of any of the depreciable equipment purchased by you for use in the "office". However, the cost of supplies that are consumed directly in the performance of the duties of office or employment and that are required by the contract of employment to be supplied by and paid for by you may be deducted. These supplies include items such as pens, paper, charts and so forth.
We trust the above comments are of assistance to you.
Yours truly,
P.D. Fuoco
For Director
Business and General Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch
c.c. Ottawa District Office
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1994
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1994
Email this Content