CRA provides ample grandfathering in changing its position for recognizing recapture from erroneous CCA claims

If, as a result of the erroneous inclusion of acquired property (e.g., property which was not acquired for an income-producing purpose) in a class of depreciable property, the bogus CCA claims thereon cause the UCC of the class, on a proper determination, to have become a negative amount, CRA now considers that the negative balance for the class will be recognized as recapture of depreciation in the first year following the acquisition which is not statute-barred. This is a change of position from IT-478R2, para. 14, which stated that a negative balance arising in a statute-barred year "will not be added into the taxpayer's income for that year or a subsequent year."

This new position will be reflected in an imminent Folio, but "will apply on a prospective basis to property acquired or transactions entered into after December 31, 2015."

Neal Armstrong.  Summary of 29 July 2015 Memo 2015-0575921I7 under s. 13(1) and s. 13(21) - undepreciated capital cost - E.