Can buildings for an old age home be depreciated and at what rate?
Important:
This answer is based on tax law for the tax year ending 28 February 2019.
Answer:
The relevant words used in section 13quin are “other than the provision of residential accommodation”. The word “residential” is not defined for purposes of section 13quin and must take it ordinary meaning. The word “residential”, when used as an adjective, means “1. Designed for people to live in.” – see the Oxford dictionary. As the term “residential accommodation” is to be interpreted, a term used in many other sections of the Income Tax Act, we submit that section 13sex should be considered. This is because section 13sex refers to a ‘residential unit’ and “residential unit” means, see section 1(1) of the Income Tax Act, “a building or self-contained apartment mainly used for residential accommodation, unless the building or apartment is used by a person in carrying on a trade as an hotel keeper”.
The old age home may well not be used by “a person in carrying on a trade as an hotel keeper” but may well involve the supply of residential accommodation. It may not fall under section 13quin.