The mammoth Folio on the general CCA rules carries forward most of the positions in predecessor Bulletins

The new Folio on the general capital cost allowance rules is in many respects a consolidation of various IT Bulletins which it replaces (285R2, 418, 220R, 190R2, 128R and 478R2). CRA has been very conservative about changing the previous positions even where subsequent developments might justify changes. For example, it has carried forward the statement in IT-128R that “where the building is used to earn income for only a short time prior to demolition, it is likely that the building will not be regarded as depreciable property unless the taxpayer can clearly establish that the prime intention on acquiring the building was for the purpose of gaining or producing income,” notwithstanding the Ludco ancillary purpose doctrine (see also Rich: subordinate purpose; and Hickman Motors: 5 days’ rental use.)

CRA also maintains some positions that it likely would not adopt if it were starting afresh, e.g., that the taxpayer has the choice of treating the cost of demolishing an old established rental building as a current expense or as a cost of the new building. Consistently with this conservatism, its new policy on assessing recapture for the first non-statute-barred year following statute-barred years in which there were proceeds received in excess of UCC, applies only to properties acquired after December 31, 2015.

A helpful discussion has been added on the more recent available-for-use rules, and briefer discussions of some other newer rules such as in s. 16.1 also are provided. Some illuminating numerical examples have been added, e.g., on the operation of the rules under s. 13(21.1) for allocating between land and building, and the s. 13(7.5) rule re access properties.

Neal Armstrong. Summaries of S3-F4-C1 under s. 18(1)(b) – capital expenditure v. expense – improvements v. repairs or running expenses, s. 13(21) – UCC – A, s. 13(21) – depreciable property, s. 16.1(1), s. 13(28), s. 13(27), Reg. 1100(2.2). 18(3.1), s. 13(7.5), s. 261(2), s. 68, s. 13(21.1)(a), s. 13(21.1)(b), s. 8(2), s. 13(9), s. 152(4), s. 13(5), and s. 13(6).