CRA confirms that aborted target acquisition expenses may qualify as Class 14.1 additions
IT-143R3, para. 23 states:
Since an outlay or expense is an eligible capital expenditure only if it is incurred for the purpose of gaining or producing income from a business, legal and accounting fees incurred in an abortive attempt to acquire shares of a corporation would normally not qualify. Where, however, the taxpayer can demonstrate that he or she proposed to make the business of the corporation part of a similar business which the taxpayer already operated, the fees may qualify as eligible capital expenditures.
CRA confirmed that this policy continues to apply respecting additions to Class 14.1. No mention was made of Rio Tinto, which carves out from acquisition expenditures those made before the decision to acquire is made.
Neal Armstrong. Summary of 19 July 2018 External T.I. 2017-0727041E5 under Schedule II, Class 14.1.