St. Benedict Catholic Secondary School Trust – Federal Court of Appeal finds that a taxpayer is precluded from changing previous CCA claims

The taxpayer, over the course of its 1997 to 2003 taxation years, claimed capital cost allowance and generated non-capital losses. When CRA denied the carryforward of these losses to the taxpayer’s 2014 to 2016 taxation years (they had expired), the taxpayer claimed that it incurred a terminal loss in 2017 that could be carried back to those years. This terminal loss was computed by reversing a portion of CCA claims it had made in its 1997 through 2003 taxation years (so as to reduce the losses in those years to nil), and adding these amounts to the undepreciated capital cost of the property it had disposed of in 2017.

In finding that such CCA claims could not be treated as having been revised, Webb JA indicated that the “administrative practice [in IC 84-1] is not binding on this Court, nor can it amend the Act, noted that “Nassau Walnut … drew a distinction between an election and a designation” and found that “the comments in Nassau Walnut with respect to an election, and the inability of a taxpayer to change an election absent a specific provision in the Act permitting such a change, are applicable in this case.” He further stated:

If the Trust is permitted to revise its earlier claims for CCA, this would defeat the purpose chosen by Parliament of having non-capital losses only available for a particular period of time. Having chosen to claim the amounts of CCA as it did in each of the years, the Trust must accept the consequences that flow from having made those choices. The Trust is attempting to revive non-capital losses that it cannot otherwise claim by converting these non-capital losses into a terminal loss in 2017.

Neal Armstrong. Summary of St. Benedict Catholic Secondary School Trust v. Canada, 2022 FCA 125 under s. 13(21) - UCC – E.