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ARTICLE · 01 MARCH 2013

Would A Pickup Truck By Any Name Be As Depreciable?

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On January 31, 2013, the Tax Court of Canada released two decisions, which are of particular interest for business owners who use motor vehicles and for their tax advisors.

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On January 31, 2013, the Tax Court of Canada released Myrdan Investments Inc. v. The Queen andDaniel Halyk v. The Queen.  These cases involve a business owner and the various business uses of his truck in the Alberta oil-patch. Automobile audits by the Canada Revenue Agency ("CRA") are very common. Accordingly, these cases should be of particular interest to business owners who use motor vehicles for work and to their tax advisors.

A bit of background on the statutory scheme behind these decisions is in order.

Many capital assets owned by a business will lose their value over time. The Income Tax Act (the "Act") permits a deduction from business income for the wear and tear on such depreciable property based on the capital cost allowance ("CCA") system.1 A significant feature of the CCA system is that different types of assets are grouped together in prescribed classes with an assigned maximum rate for yearly depreciation. Most, but not all classes, are depreciated

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