CCA

Question 1

CCA

Answer 1

• only able to be claimed on depreciable assets
• may not be calimed on an asset until it is available for use
• $0 - max CCA can be claimed in the year
• individual assets are not separately depreciated, similar assets are included in specific CCA classes. Some exemptions apply.

Question 2

When is an asset considered to be available for use?

Answer 2

the earlier of:

• the time it is first used by the taxpayer
• the second taxation year following its acquisition

Question 3

UCC calculation

Answer 3

UCC bal, beg

+ Additions

• Disposals (lesser of proceeds and cost)
• half year rule (1/2 of additions less disposals) (+AII 50%)

= base amount for CCA

• CCA claimed in the year

+ Half year rule (-AII 50%)

= UCC bal, end

Question 4

Accelerated investment incentive

Answer 4

Instead of half year rule…

Half yr rule = less 1/2 of net additions.

AII = add back 1/2 of net additions

Question 5

When can an asset be in its own CCA class

Answer 5

• in some situations, individual assets are required to be included in a separate class (Class 10.1, automobiles costing more than 30,000 before GST)
  
  • recapture/tl rules don’t apply!
• for certain assets, a taxpayer may make an election to include the cost of a specific property in a separate class (Class 8)
  
  • has to cost more than $1,000.
• Rental properties costing more than $50,000

Question 6

Recapture

Answer 6

arises if after adding the cost of all additions and deducting all disposals, the UCC balance is negative

• negative balance is added back to UCC to arrive at a nil balance
• also added back to the taxpayer’s net income for tax purposes

Question 7

Terminal loss

Answer 7

arises if, after adding the cost of all additions and deducting all disposals, a postiive balance remains in the class and the taxpayer owns no other assets in that CCA class (the last asset was sold)

• positive balance is deducted from UCC to arrive at a nil balance in UCC and is also deducted from taxpayer’s net income

Question 8

Classes not subject to the half year rule

Answer 8

Class 13, 14, 29

Question 9

Class 12

Answer 9

Tools less than $500

100%

Question 10

Class 13 - general info

Answer 10

Leasehold improvements

• Incl costs for alterations made to rental premises to customize them for the specific needs of the tenant.
• CCA must be determined separately for each leasehold improvement.
• AII applies

Question 11

Class 13 calc

Answer 11

CCA is the leser of:

• 1/5 of the cost
• 1 / (# of 12 month periods from beg of tax year in which the costs were incurred to the end of the lease term*) * cost

(1/(9+1)) * cost

*max 40 years,

Question 12

Class 14

Answer 12

Limited life intangibles

• incls intangible assets such as trademarks with limited useful lives.
• separate CCA calc is required for each asset incl in cl 14
• Short taxation rules don’t apply
• Normal recapture/tl rules.

Yr of acq: (Cost / legal life) * (Days remaining in tax year from acq date / Total days in tax year) * 1.5 AII

Post acq: (Cost / legal life)

Question 13

Class 50