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.
Principal Issues: Which CCA classes do an arena and skateboard park belong to?
Position: Arena - 1 or 6; Skateboard park - 8(i)
Reasons: See below
Author: Robinson, Katie
Section: 20(1)(a), Schedule II of the Regulations
2014-056028 K. Robinson
December 17, 2014
Re: Capital Cost Allowance
We are writing in response to your email of December 5, 2014, and our telephone conversation of December 15, 2014 (Robinson/XXXXXXXXXX), wherein you requested our views on the proper capital cost allowance (“CCA”) class under Schedule II of the Income Tax Regulations (“Regulations”) for a hockey arena and a skateboard park.
Briefly, you indicated that the taxpayer is in the business of operating a summer camp for children and, during the year, the taxpayer constructed a hockey arena and a skateboard park. You were unable to provide us with any details as to the nature of the construction of the hockey arena; however, you did indicate that the skateboard park involved the design and construction of movable ramps.
This technical interpretation provides general comments about the provisions of the Income Tax Act (the “Act”) and related legislation. It does not confirm the income tax treatment of a particular situation but is intended to assist you in making that determination. The income tax treatment of transactions will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R5, “Advance Income Tax Rulings”.
“Building” is a term of wide range covering any structure with walls and a roof affording protection and shelter. The word “structure” includes anything of substantial size that is built up from component parts and intended to remain permanently on a permanent foundation. Portable shelters such as housing, office and other service units are regarded as buildings if they are installed and intended to remain in a particular location. Such things as tents, canvas marquees and air-supported fabric domes that are not part of a rigid structure are not considered to be buildings or structures.
Ordinarily, buildings or other structures, or parts thereof, acquired after 1987 are included in Class 1 for CCA purposes. Exceptions to this general rule are structures and buildings specifically included in another CCA class, such as Class 6 – generally speaking, a building made of frame, log, stucco on frame, galvanized iron, or corrugated metal (corrugated iron before 1988) and in addition, one of the following conditions applies:
* you acquired the building before 1979;
* the building has no footings or other base supports below ground level; or
* the building is used to gain income from farming or fishing.
Generally speaking, most hockey arenas constructed after 1987 would be included in Class 1 unless Class 6 otherwise applies. In addition, since the skateboard park ramps are movable and do not appear to be property specifically described in any other CCA class, such property would be included in Class 8(i), which has a CCA rate of 20%.
If the taxpayer incurred paving costs or similar surface construction cost for such assets, the capital cost of such property would normally be included in Class 17 by virtue of paragraph (c) thereof.
Please visit the CRA’s website for commonly used CCA classes, their descriptions and rates.
We trust that these comments will be of assistance.
Michael Cooke, C.P.A., C.A.
Business Income and Capital Transaction Section
Business and Employment Division
Income Tax Rulings Directorate
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