Canada v. Donohue Normick Inc.
A-500-94
Hugessen J.A.
6/11/95
9 pp.
Appeal from Tax Court of Canada decision allowing respondent's appeal against reassessments for 1985 and 1986 taxation years-Respondent pulp and paper manufacturer operating newsprint manufacturing plant-Dispute related to characterization for Income Tax Act purposes of cost of seventeen "spare parts" for paper machine, purchased by respondent in 1985 and 1986-Issue whether cost of seventeen parts in question capital expenditure-TCC correct to conclude parts in issue "must be considered to be subject to capitalization"-Several criteria should be added to those used, namely life expectancy of parts in issue, their value and fact intended to be used for production and not resale-Respondent's right to claim investment tax credit with respect to purchase price of parts depended on whether each of parts "qualified property" within meaning of Act, s. 127(9)-Respondent's right to claim high depreciation rate with respect to parts depended on whether they fit within definition in Class 29 of Schedule II to Regulations-It seemed clear all parts in issue would eventually be used-Sufficient if reasonable expectation property will be used in future-TCC judge correct in finding respondent entitled to investment tax credit and that property part of Class 29 of Schedule II-Appeal dismissed-Income Tax Act, S.C. 1970-71-72, c. 63, s. 127(9) (as am. S.C. 1985, c. 45, s. 72; 1986, c. 6, s. 71)-Income Tax Regulations, C.R.C., c. 945, Schedule II, Class 29.