CRA considers that Reg. 1101(5b.1) separate class status cannot be overridden by a Reg. 1103(1) election

Reg. 1103(1) allows a taxpayer to elect to include, what otherwise would be Class 2 to 12 properties of the same business, in Class 1, thereby reducing its potential CCA claims but also potentially avoiding (or deferring) recapture of depreciation. An additional 2% CCA claim is potentially available under Reg. 1100(1)(a.2) respecting an eligible non-residential building (potentially including a building addition) for which a Reg. 1101(5b.1) election has been made for it to be included in a separate class.

Regarding a partnership (SENC) holding Class 1 buildings along with additions thereto included in a separate class pursuant to a Reg. 1101(5b.1) election, and also holding property in Classes 8 and 10, CRA stated:

[T]he making of an election under subsection 1103(1) by a taxpayer does not override the election under subsection 1101(5b.1) and will not nullify its effects. … Consequently … SENC could elect, under subsection 1103(1), to include in Class 1 of Schedule II, the properties in Classes 8 and 10, but could not include those covered by the election under subsection 1101(5b.1).

Neal Armstrong. Summary of 15 February 2023 External T.I. 2022-0934821E5 F under Reg. 1103(1).