CCA Class Adjustments

by Allan
(Halifax, NS)

What is the best way to handle a CCA classification error from a previous year?

For example, a miscommunication between a sole-proprietorship and their accountant put a significant amount in CCA class 1, that should have been in a higher percentage CCA class or even expensed in some cases.

I believe there is a 90 day rule (after filing return) restricting changes in this regard. Any help/experience with this would be much appreciated.

A Winters

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Hi Allan,

In Evelyn Jacks' book Make Sure its Deductible Little Known Tax Tips for Your Small Canadian Business, she explains that "while CCA claims must generally be made within 90 days after receipt of a Notice of Assessment or Reassessment, a tax auditor will generally allow retroactive adjustments to the CCA statements during an audit."

As you are not being audited, you have to file within the 90 days as you mentioned.

I would call CRA and talk to them about the proper procedure and/or try a T1ADJ (or letter if it is a T2) with the changes and a good explanation as to why you are requesting the change. Attach any pertinent schedules.

P.S. I would like to remind you there is a difference between information and advice. The general information provided in this post or on my site should not be construed as advice. You should not act or rely on this information without engaging professional advice specific to your situation prior to using this site content for any reason whatsoever.

Comments for CCA Class Adjustments

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Feb 27, 2011
Information Circular 84-1
by: Lake

Sorry, forgot to include the CRA reference that may be helpful.

Information Circular 84-1 titled Revision of Capital Cost Allowance Claims and Other Permissive Deductions.

Mar 11, 2011
Adjusting CCA Classes
by: Lake

I have a found a reference in the CCH publication Preparing Your Income Tax Returns 2011 Edition for 2010 Returns on how to transfer between classes.

In paragraph 871 it says:

A transfer ... is accomplished by adjusting the UCC of the former class to what it would have been if the property had never been included ... and adjusting the UCC of the new class to reflect a previous acquisition (and depreciation) of the transferred property.

... backing out transferred assets from the old class means deducting their value from cumulative additions and deducting the depreciation taken on them ...

Mallin gives an excellent example. If you can get your hands on this book ... maybe the library carries it, I don't know ... have a read.

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