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ARTICLE · 17 FEBRUARY 2014

Budget 2014: Consultation On Eligible Capital Property

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Budget 2014 announced a public consultation on a proposal to (i) repeal the eligible capital property regime, (ii) replace it with a new capital cost allowance class available to businesses, and (iii) transfer taxpayers' existing cumulative eligible capital pools to the new CCA class.

CanadaTax
Michael Friedman
Michael Friedman
Peter Botz
Peter Botz
Michel M. Ranger
Michel M. Ranger
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Budget 2014 announced a public consultation on a proposal to (i) repeal the eligible capital property ("ECP") regime, (ii) replace it with a new capital cost allowance ("CCA") class available to businesses, and (iii) transfer taxpayers' existing cumulative eligible capital ("CEC") pools to the new CCA class.

Background

Under the current rules, capital expenditures are generally not deductible in computing a taxpayer's income from a business, unless specifically permitted under certain provisions of the Income Tax Act (Canada) (the "Tax Act"). One such provision permits discretionary deductions, in the form of CCA, in respect of the cost of depreciable capital property based on prescribed maximum rates of deductible depreciation applied on a declining balance basis to the undepreciated capital cost of the property. Different types of depreciable property are assigned to various classes, or pools, of assets, each having its own prescribed maximum rates

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