Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Addition to letter issued, document 2014-051673.
Position: Requested by taxpayer.
Reasons: See below.
XXXXXXXXXX
2014-052418
K. Robinson
March 17, 2014
Dear XXXXXXXXXX:
Re: Correction of an Addition to the Undepreciated Capital Cost of an Asset
Further to our telephone conversation of March 14, 2014 (Robinson/XXXXXXXXXX), you have asked us to confirm the potential future income tax savings that could result from the correction of an error that was subject of our previous letter to you dated January 8, 2014 (2014-051673). In our previous letter, it was our general understanding that the particular client was an individual who carried on a farming business in the province of Alberta as a sole proprietor and who under-reported the purchase price of a depreciable property used in that business.
While we are unable to confirm your client's specific income tax savings related to the error correction, based on current personal income tax rates, for every $1 of capital cost allowance deducted in computing income by an individual carrying on a business in Alberta would result in approximately $0.25 to $0.39 of federal and provincial income taxes being saved.
We trust that these comments will be of assistance.
Yours truly,
Michael Cooke, C.P.A., C.A.
Manager
Business Income and Capital Transaction Section
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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