Tax Tips



CCA & Beneficial Ownership
Subject: Beneficial Ownership
Number: 05-27
Date: 10/21/2005
Ownership by a spouse does not preclude CCA and related expenses if paid by the taxpayer

A taxpayer may claim capital cost allowance ("CCA") on an asset from which the taxpayer can earn property or business income.

A common issue in determining when CCA can be claimed is the determination of when an asset becomes "available for use" by the taxpayer.

When a taxpayer's spouse purchases an asset, but the taxpayer uses the asset for business or property purposes, can the taxpayer claim depreciation on the asset which is not in his or her name? Interpretation Bulletin IT 285 R2, paragraph 17, states that a taxpayer will be considered to have acquired a depreciable property at the earlier of:

  1. the date on which the title to it is obtained; and
  2. the date on which the taxpayer has all the incidents of ownership, such as possession, use, and risk, even though legal title remains with the vendor as security for the purchase price.

The CRA recently commented (in Technical Interpretation 2005-0122211E5) on a situation where a taxpayer's spouse obtained a loan and purchased a vehicle for the taxpayer to use in his business. In this case, the taxpayer will make the loan repayments and all maintenance payments for the vehicle. The CRA confirmed that the taxpayer, the beneficial owner, would be entitled to claim CCA on the vehicle.

There are many situations where an individual does not want to have assets, needed for business use, in his name. The CRA decision permits a spouse to be the purchaser/owner of an asset but the taxpayer can deduct all the related expenses which he pays.


TAX TIP OF THE WEEK is provided as a free service to clients and friends of the Tax Specialist Group member firms. The Tax Specialist Group is a national affiliation of firms who specialize in providing tax consulting services to other professionals, businesses and high net worth individuals on Canadian and international tax matters and tax disputes.

The material provided in Tax Tip of the Week is believed to be accurate and reliable as of the date it is written. Tax laws are complex and are subject to frequent change. Professional advice should always be sought before implementing any tax planning arrangements. Neither the Tax Specialist Group nor any member firm can accept any liability for the tax consequences that may result from acting based on the contents hereof.