Troubleshooting Cantax T1 – Federal – Class 14.1 – Eligible capital property transitional information – Carry forward of the CCA claimed with respect of the January 1, 2017 opening balance

  • Article Type: Problem Resolution
  • Last Modified: 2019-06-17

Symptoms

In Forms T2042, T2121, T2125, T1163, and T1273, all the information related to the cumulative eligible capital (CEC) before 2017 is carried forward in section Class 14.1 – Eligible capital property transitional information.

A problem has been identified on line 6, CCA claimed with respect to this UCC balance in preceding taxation years, of this section. If, in 2017, there was an amount on line 6 of the CCA column, the amount carried forward in 2018 on line 6 is incorrect.

The amount that must be carried forward on line 6 of section Class 14.1 – Eligible capital property transitional information is the “CCA claimed with respect to this UCC balance in preceding taxation years”. 

When there are additions in 2017, the amount carried forward on line 6 includes the amount of CCA claimed on the additions instead of only the amount of CCA claimed on the January 1, 2017 CEC opening balance.

Example:

2017 TAX YEAR
                                                                                                                             
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In this situation, there are additions in 2017 and the CCA claimed on line 9 includes CCA on those additions. The amount of 2,756.41 represents the CCA claimed of:
  • 2,732.16 on the UCC balance for property acquired before January 1, 2017; and
  • 24.25 on the 2017 additions.

2018 TAX YEAR

In section Class 14.1 – Eligible capital property transitional information, the amount carried forward on line 6 equals the amount of CCA claimed in 2017, which is incorrect. The amount carried forward should only be the amount of CCA claimed on the 2017 CEC opening balance. In the example, the amount that should have been carried forward is 2,732.16 (39,030.84 X 7%).

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If there is no addition in 2017, the amount carried forward is correct.
 

Environment

All 2018 versions of Cantax T1

Cause

N/A

Resolution

The amount on line 6 of section Class 14.1 – Eligible capital property transitional information must be modified using the following procedure:

If there are only additions in 2017 (no disposition)
From the 2017 file:
  1. Calculate the CCA on additions made in 2017: Multiply one half of the additions (line 6 of the calculation of CCA claim for class 14.1) by the rate of CCA for class 14.1 (5%);
  2. Subtract the amount calculated in step 1 from the amount calculated on line 9, CCA claimed, of the calculation of CCA claim for class 14.1; and 
In the 2018 tax return:
  1. Enter the result on line 6 of section Class 14.1 – Eligible capital property transitional information of the applicable self-employment statement form (T2042, T2121, T2125, T1163, or T1273).
If we refer to the example above:
  1. Calculate the CCA on additions made in 2017:
485.00 x 5% = 24.25

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  1. Calculate the correct amount to enter on line 6 of section Class 14.1 – Eligible capital property transitional information:

2756.41 - 24.25 = 2732.16

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If there are additions and dispositions in 2017
Calculate the amount as follows:

From the 2017 file:
  1. Opening CEC balance (Amount from line 1 of section Class 14.1– Eligible capital property transitional information) minus Disposition (of an asset acquired before January 1, 2017) – Line 4 of the calculation of CCA claim for class 14.1 plus Total CCA Adjustments under subsection 13(39) (Amount from line 9 of section Class 14.1 – Eligible capital property transitional information).
  2. Multiply that amount by 7%.

In the 2018 tax return:
  1. Enter the result on line 6 of section Class 14.1 – Eligible capital property transitional information of the applicable self-employment statement form (T2042, T2121, T2125, T1163, or T1273).

Example:

There is a disposition of $400 of an asset owned before January 1, 2017.

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In this situation, the amount to enter on line 6 of section Class 14.1 – Eligible capital property transitional information of the applicable self-employment statement form (T2042, T2121, T2125, T1163, or T1273) is:

39,030.84 - 400 + 100 = 38,730.84
38,730.84 x 7% = 2,711.16

 

Additional Information

This problem will be corrected in Cantax T1 19.1.3xx.100.
 
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 Solution Id Troubleshooting-Cantax-T1-Federal-Class-14-1-Eligible-capital-property-transitional-information-Carry-forward-of-the-CCA-claimed-with-respect-of-the-January-1-2017-opening-balance
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