New class 14.1 added to support the repealed Eligible Capital Property rules as of Jan. 1, 2017
The eligible capital property (ECP) rules are repealed and replaced by new Class 14.1 to the Income Tax Regulations (the Regulations), effective on January 1, 2017. Property that was ECP will be depreciable property and expenditures and receipts that were accounted for under the ECP rules will be accounted for under the rules for depreciable property and capital property. Thus, we added new class 14.1 to Schedule 8 and S8Asset Worksheet, starting in our December 2, 2016 release of TaxCycle.
Assets in this new Class 14.1 are allowed to be depreciated at a 5% declining balance rate. Also, for taxation years that end before 2027, an additional 2% rate is allowed (making it a total of 7% CCA rate) in respect of that portion of the undepreciated capital cost of the class that relates to expenditures incurred before January 1, 2017. If the total CCA calculated at 7% rate is less than $500, the CCA claim may be increased to allow $500 total capital cost allowance for the class. For further information about the new class 14.1, please refer to: http://www.budget.gc.ca/2016/docs/tm-mf/notes-en.html
In TaxCycle, when a corporation’s taxation year ends after 2016, TaxCycle triggers a review message in S10Worksheet (S10WS) to transfer the CEC balance to Schedule 8 and S8AssetWorksheet as shown below. In order to initiate the transfer, simply click on the Transfer to S8 link in the Quick Fix message: