Please note that the following Policy Statement, although correct at the time of issue, may not have been updated to reflect any subsequent legislative changes.

GST/HST Policy Statement P-060

Date of Issue

May 25, 1993

Subject

Definition of cost of capital property

Legislative Reference(s)

Sections 173 and 204 of the Excise Tax Act

National Coding System File Number(s)

11585-0

Effective Date

January 1, 1991

Text

This statement of interpretive policy discusses the following questions:

What is meant by the expression "cost of capital property" for purpose of the GST? Does the "cost of capital property" include the provincial sales tax and the GST or exclude these taxes?

The "cost of capital property" includes GST accounted for net of any input tax credits or rebates claimed and the provincial sales tax net of any applicable credits or rebates under the provincial sales tax legislation.

SAMPLE RULINGS

Example 1

Statement of Facts

A financial institution buys a computer having a cost of $46,300 before taxes.Its commercial activities account for 30% of its total activities. If we include a provincial sales tax, for example 8%, and the GST accounted net of input tax credits (3241-972), the cost would be $52,273.

Rulings Requested

Does the "cost of property" include provincial sales tax and GST or exclude these taxes when section 204 refers to personal property of a registrant that is a financial institution having a "cost" of more than $50,000?

Rulings Given

The "cost of capital property" includes GST accounted net of any input tax credits or rebates claimed and the provincial sales tax net of any applicable credits or rebates under the provincial sales tax legislation.

Example 2

Statement of Facts

A financial institution buys a van having a cost of $30,000 before taxes. Its commercial activities account for 40% of its total activities. If we include a provincial sales tax, for example 8% and the GST accounted net of input tax credits (2100-840), the cost would be $33,660.

Rulings Requested

Does the "cost of property" include provincial sales tax and GST or exclude these taxes when subsection 173(3) refers to the "cost" of property to the registrant who is a financial institution , not exceeding $50,000?

Rulings Given

The "cost of property" includes GST accounted net of any input tax credits or rebates claimed and the provincial sales tax net of any applicable credits or rebates under the provincial sales tax legislation.