CRA indicates that recapture of depreciation or eligible capital amounts realized on sales occurring before the safe-income determination time will be included in safe income

Under s. 55(2) (and draft s. 55(2.1)(c)), it is only safe income realized before the safe-income determination time which can be accessed. This creates a technical difficulty in the case of recapture of depreciation and eligible capital amounts, which are stated to arise only at the end of the taxation year in which the related dispositions occurred.

However, CRA has indicated that it nonetheless will accept that such income arose before the safe-income determination time if the sale giving rise to such income occurred before that time – and similarly for terminal losses.

Neal Armstrong. Summary of 20 April 2016 T.I. 2016-0633961E5 Tr under s. 55(2.1)(c).