enfr

Schedule 8 CCA and Assets

Updated: 2017-04-26

In TaxCycle T2 and T5013, Capital Cost Allowance (CCA) and assets are entered and calculated on three forms:

  • Schedule 8 (S8), the standard CCA schedule
  • S8Asset, where you can manage assets in detail
  • S8Claim, where you can set the order in which you want to claim the CCA properties
  • S8RecWS, where you reconcile changes in fixed assets during the corporation's tax year

For simple CCA claims, you may wish to enter the values directly on CCA Schedule 8. For clients with many assets, you can track acquisitions, dispositions and classes on the detailed S8Asset. The amounts flow between S8Asset and the S8

Schedule 8 (S8) – Capital Cost Allowance

  1. If you choose to enter CCA on the S8, use one row on the schedule for each CCA class or pool.
  2. As you complete a row, TaxCycle adds a new blank row to the bottom of the table.
  3. If you carried forward the return, the class number and Undepreciated capital cost (UCC) will appear in the applicable column.
  4. Double click on a row to jump to the related page and field on the S8Asset.

s8-table

S8Asset – Asset Manager

The Asset Manager (S8Asset) lists one record per page. If you entered CCA details directly on the S8, TaxCycle creates a separate page for each row on the S8.

To create a new asset class on the S8Asset:

  1. Click New Record.
  2. Enter a Description.
  3. Type the class number. TaxCycle automatically adds a letter to the end of each CCA class to allow you to pool or separate assets as required (see below).
  4. Further down the worksheet, enter details of any additions or disposition. When you start a new section in the Current Year Addition/Disposition Transactions section, a new blank one is created, so you can add as many as you like.
  5. Based on the Transaction date of the addition and class, TaxCycle automatically determines whether the asset is eligible for Accelerated CCA measures. You can see the results of those calculations in the Net addition calculation section. 
  6. When applicable, additional details about accelerated CCA calculations appear in the Accelerated Investment Incentive Property (AIIP) section. Please read the Accelerated CCA help topic for further details on this measure and the calculations in TaxCycle.

2019-s8sset-with-accelerated-dpa


How to find the right CCA class

  1. Type the descriptionPlace your cursor in the Class field.
  2. Begin typing the description of the capital asset. In this case, start typing spacecraft.
  3. Even before you finish typing all the letters in the word, TaxCycle matches it to the class description.
  4. Press Enter.

pooled-assets Pool assets of the same type

Even though you are permitted to pool many assets of the same type, it can become unwieldy to keep track of original costs. And, this eventually makes it difficult to enter disposition. On the Asset Manager, you can create and maintain a separate CCA record for each capital asset and let TaxCycle pool them when reporting to the CCA.

For example, let's enter asset records for three office chair purchases: Dan's chair at a cost of $750, Steven's chair at a cost of $610, Allen's chair at a cost of $679:

  1. On the Asset Manager, create three separate class 8-a asset entries for the addition of each asset, selecting class 8-a at the top of each record.
  2. TaxCycle then calculates CCA on a pooling of costs basis for all the assets under the same CCA class and lists the items together on the CCA worksheet. Pool entries appear with green text and you cannot edit them on the CCA worksheet.

Separate CCA assets from the same class

Separate CCA classes TaxCycle automatically adds a letter to the end of each CCA class, for example 1-a. This allows you to create separate CCA classes for capital assets that you are not permitted to calculate by pooling the cost basis.

For example, if your client has class 1 rental properties costing $50,000 or more, you must create separate classes. Make one entry with class 1-a and one for class 1-b. These will then appear as separate rows on the CCA worksheet and on separate pages on the Asset Manager.

Terminal loss for all assets in the same class/pool

To trigger a terminal loss for all of the assets under the same class, make one terminal loss entry under one Asset Manager record for that class/pool:

  1. Dispositions terminal loss questionOpen any one of the records for the same class/pool in Asset Manager.
  2. Enter the total Proceeds for all assets in that class/pool.
  3. Enter the total Cost for all assets in that class/pool.
  4. Answer Yes to the Terminal loss? question.
  5. TaxCycle calculates the terminal loss of the same class/pool on the CCA worksheet.

Claim a different CCA amount Claim a different CCA amount

If you wish to claim a different CCA amount, set it on the CCA worksheet.

  1. Open the S8.
  2. Below the table in answer Yes to the Claim a different amount? question.
  3. Enter the amount you wish to claim.
  4. You can specify different claim amounts for rental and non-rental assets.

Adjust the CCA claim order on S8Claim

Use the S8Claim worksheet to define the order in which to claim CCA from different classes:

  1. On the S8, enter a different amount to claim (see above). For example, $500.
  2. Go to S8Claim choose the order in which to claim the CCA.
  3. You can specify different claim amounts for rental and non-rental assets.
  4. You can also choose whether to include buildings in these claims.
  5. At the bottom of the worksheet, the actual CCA claim switches between classes as you change the claim order, while the Total CCA Claim remains at $500. 

S8Claim worksheet

Reconcile fixed assets on the S8RecWS

The S8RecWS worksheet shows changes to capital assets made over the tax year and reconciles the amounts calculated for accounting and tax purposes.

For example, if a corporation purchases $1,000 computer equipment during a tax year, this increase is reflected on the GIFI balance sheet (S100). The same $1,000 purchase is recorded on the S8 as an addition. In theory, the $1,000 increase (net of amortization) on the S100 should then correspond to the same increase on the S8. This is the basis of  the S8RecWS in TaxCycle.  

s8recws636483725811975508

S8RecWS Examples

We include two sample files when you install TaxCycle to help show you how this works. You will find them in:
C:\Program Files (x86)\Trilogy Software\TaxCycle\Samples

Year 1

  • Tax year ending on December 31, 2016
  • Computer equipment purchase: $1,000 (S100 GIFI 1774)
  • Computer equipment accumulated amortization: $10 (S100 GIFI 1775)
  • Computer equipment amortization: $10 (S125 GIFI 8670)

See sample file S8Rec Example Year 1.2017T2

  1. On S8RecWS, in the Net change in NBV per GIFI section, the NBV in the financial statements has increased by $990 net of accumulated depreciation ($1,000 – $10).
  2. The middle section, Net change calculated from various schedules in the T2 return , shows that $1,000 is recorded on the S8 and shows a net increase (net of annual amortization expenses) of $990.
  3. Since the amounts from both sections agree, the worksheet provides assurance that the capital assets increase in the financial statements agree to the increase in S8 in the T2 return.
  4. You can use the  File Reference column on the left of the worksheet to record references to the tax working paper file.

s8recws-year-1-example636483714789028789

Year 2
  • Tax year ending on December 31, 2017
  • Proceeds of disposition: $600
  • Accounting loss on disposition: $390 ($600 proceeds - $990 net book value; S125 GIFI 8210)

Let’s take the previous example one step further. The same corporation begins its second year of operations. Assume that all computer equipment is sold for proceeds equal to $600, creating an accounting loss of $390 in the income statement (S125 GIFI 8210).

See sample file S8Rec Example Year 2.2017T2

  1. The Net change in NBV per GIFI section shows that NBV in the financial statements has decreased by $990 of NBV.
  2. The Net change calculated from various schedules in the T2 return shows the loss of $390 along with $600, which is the lower of cost or proceeds, resulting in a corresponding decrease of $990. 
  3. Since the amounts from both sections agree, the worksheet provides assurance that the capital assets decrease in the financial statements agree to the decrease in S8 in the T2 return.
  4. You can use the  File Reference column on the left of the worksheet to record references to the tax working paper file.

s8recws-year-2-example