RESOLVED: CDA Miscalculation Due to Capital Gains Reserve Balances

We are aware of an issue where TaxCycle T2 is miscalculating the Capital Dividend Account (CDA) when the capital gains reserve closing balance (line 885 in Schedule 6) is greater than the capital gains reserve opening balance (line 880 in Schedule 6).

This causes the CDA addition in the CDA Current Year worksheet to be overstated by the amount of the capital gains reserve. 

For example:

• Capital gains: $100,000
• Capital gains reserve claimed in Schedule 13: $80,000
• Net capital gains: $20,000 ($100,000 − $80,000)
• The correct addition to CDA should be $10,000 (if 50% inclusion rate used) or $6,667 (if 2/3 inclusion rate is used), but TaxCycle calculates the addition to be $50,000 and ignores the capital gains reserve claim amount.

Workaround

Override the amount on the CDA Current Year worksheet as applicable.

Resolution

We resolved this issue in the latest TaxCycle update.