Immediate Expensing of CCA - Sharing the Limit within an Associated Group

On May 19, 2022, CPA Canada provided comments received from CRA in respect of the proposed immediate expensing of CCA rules (included in Bill C-19). Now that legislation has been tabled, claims under these rules may be made (although previously submitted returns can not yet be adjusted). When sharing the limit amongst an associated group of CCPCs, a prescribed form must be completed. CRA stated:

The prescribed form that will be used when an immediate expensing limit is to be shared amongst an associated group of CCPCs is the T2 Schedule 8, Capital Cost Allowance. Once the T2 Schedule 8 is updated, it will be published on Canada.ca and further information about immediate expensing, including how to claim it, will be posted on the What’s New for Corporations website.

The legislation for immediate expensing does not require that the prescribed form be filed at the time of filing – only that a person or a partnership has 30 days to submit after receiving notice that it is required:

ITR 1104 (3.4) If any of the eligible persons or partnerships that are associated with each other (within the meaning of section 256 of the Act, as modified by subsection (3.6)) in a taxation year has failed to file with the Minister an agreement described in subsection (3.3) within 30 days after notice in writing by the Minister has been forwarded to any of them that such an agreement is required for the purpose of any assessment of tax under Part I of the Act, the Minister shall, for the purpose of this Part and Schedules II to VI, allocate an amount to one or more of them for the taxation year.

If claims are submitted prior to the revised T2 Schedule 8 being published, the CRA may contact the corporation to submit the information once the new schedule is available. Otherwise, an amended T2 Schedule 8 that includes this information is required with the corporation’s next T2 return.

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Life in the Tax Lane is for general information purposes only and deals with dynamic, time-sensitive and complex matters that may not apply to particular facts and circumstances. The information provided should not be relied upon as a substitute for specialized professional advice in connection with any particular matter. For more information visit videotax.com/disclaimer. ©Video Tax News Inc. 2022, All Rights Reserved.

 
 

BillC-208: CRA Comments on Affidavits and Valuations

On April 4, 2022, CRA updated its website to include comments on the required affidavits and valuations for intergenerational transfers pursuant to the changes introduced in Bill C-208. It includes:

In the 2022 Federal Budget, a consultation was announced in respect of further changes to these rules.

Federal Budget 2022 is now released! Here are ten key considerations for accountants and small business advisors.

Budget 2022 proposed a broad array of changes impacting a wide variety of individuals, businesses, charities and other organizations. While there was some speculation, the Budget included no changes to the personal or corporate tax rates, nor to the inclusion rate on taxable capital gains.

After a long evening of analysis, the VTN team has come up with this list of ten areas for accountants and small business advisors:

1) Housing Affordability – Proposed new measures and enhancements to existing measures

  • New Tax-Free First Home Savings Account whereby contributions (of up to $8,000 annually and $40,000 in total) would be deductible, and income in account and withdrawals to make the purchase of a first home would not be taxable.

  • Doubling of the Home Buyers’ Tax Credit.

  • Doubling the maximum Home Accessibility Tax Credit.

  • New Multigenerational Home Renovation Tax Credit which would provide a refundable tax credit on up to $50,000 of eligible expenditures in respect of renovations to build a qualifying secondary suite for an eligible relation (65+ or eligible for the disability tax credit).

  • Two-year prohibition of foreign commercial enterprises and people who are not Canadian citizens or permanent residents from acquiring non-recreational, residential property in Canada.

  • New residential property flipping rule that all gains arising from dispositions of residential property (including rental property) that was owned for less than 12 months to be business income, except where certain life events are experienced, such as a death, relationship breakdown, birth or addition to the family, or disability.     

2) New residential property assignment sales will be subject to GST/HST.

3) Medical expense tax credit being broadened to be accessible by those who rely on a surrogate or a donor to become a parent.

4)  Labour mobility deduction for tradespeople to allow for a deduction of up to $4,000/year related to travel and temporary relocation costs for those in the construction industry.

5) Small Business Deduction – Access to the small business deduction will be enhanced for corporations with taxable capital between $10 million and $50 million. The business limit will be reduced by $1 for every $80 of taxable capital in excess of $10 million, such that the limit will be more gradually reduced, and only eliminated where taxable capital equals or exceeds $50 million.

6) Anti-Avoidance Measures – Corporate Investment Income – Private corporations which are not CCPCs, but are factually controlled by one or more Canadian persons, would be subject to the same investment income rules as a CCPC.

7) Intergenerational Business Transfers (Bill C-208)– The government reiterated its intention to amend the legislation to restrict these transactions to genuine intergenerational business transfers, while continuing to facilitate legitimate business successions. A consultation was announced, with amending legislation expected to be tabled in the Fall of 2022.

8) Flow-through shares – Tax benefits for flow-through shares will be enhanced for critical mineral exploration and removed for oil, gas and coal.

9) Digital platform operators will be required to disclose details of the activities of Canadian participants in the digital economy.

10) Charities – Modifications to the disbursement quota and the rules for working with organizations that are not qualified donees.

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Watch! Life in the Tax Lane - April 2022

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This FREE 10-minute video for Canadian Tax Professionals includes rapid-fire discussion of select recent developments in the wonderful world of Canadian tax presented by the Video Tax News Team. 

Sources:

Life in the Tax Lane is for general information purposes only and deals with dynamic, time-sensitive and complex matters that may not apply to particular facts and circumstances. The information provided should not be relied upon as a substitute for specialized professional advice in connection with any particular matter. For more information visit videotax.com/disclaimer. ©Video Tax News Inc. 2022, All Rights Reserved.

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