Troubleshooting T22019-003 – Schedule 12 – Incorrect calculation of the deduction in respect of the accelerated Canadian development expenses and accelerated Canadian oil and gas property expenses when the taxation year is less than 51 weeks

  • Article Type: Problem Resolution
  • Last Modified: 2019-08-08

Symptoms

The program does not prorate the deduction in respect of the accelerated Canadian development expenses and accelerated Canadian oil and gas property expenses if the taxation year ends after July 30, 2019, and if the latter is less than 51 weeks.

Environment

Published in August 2019
Corporate Taxprep Classic 2019 v.1.0
Corporate Taxprep Classic 2019 v.1.1
Corporate Taxprep 2019 v.1.1
CCH iFirm Tax T2 2019 v.1.1
 

Cause

In section 1 of the Legislative Proposals Relating to Income Tax and Other Legislation published on July 30, 2019, the federal Government announced that the deduction in respect of the accelerated Canadian development expenses and accelerated Canadian oil and gas property expenses must be prorated to the number of days in the taxation year on 365 when the taxation year ends after July 30, 2019, and the latter is less than 51 weeks.

Resolution

Canadian development expenses

If the corporation claims a deduction in respect of the accelerated Canadian development expenses, use an override and enter the result of the following calculation in the field Deduction in respect of the accelerated Canadian development expense of the Regular expenses column in Part 5 of Schedule 12:

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For example, the following calculation must be performed if the corporation incurred $50,000 in eligible expenses and its taxation year is from November 1, 2018, to August 31, 2019:

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Corporate Taxprep

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CCH iFirm Tax T2

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Note that if the corporation has a permanent establishment in Alberta and/or Québec, that same calculation must be performed considering the expenses specific to these provinces. The result should then be entered in the corresponding field in the Area D section of the AT1 Schedule 15 or Part 5 of Schedule 12, Amount Respecting Resources for Québec, where applicable.

Canadian oil and gas property expense

If the corporation claims a deduction in respect of the accelerated Canadian oil and gas property expense, use an override and enter the result of the following calculation in the field Deduction in respect of the accelerated Canadian oil and gas property expense of the Regular expenses column in Part 6 of Schedule 12:

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For example, the following calculation must be performed if the corporation incurred $100,000 in eligible expenses and its taxation year is from November 1, 2018, to August 31, 2019:

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Corporate Taxprep

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CCH iFirm Tax T2

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Note that if the corporation has a permanent establishment in Alberta and/or Québec, that same calculation must be performed considering the expenses specific to these provinces. The result should then be entered in the corresponding field in the Area E section of the AT1 Schedule 15 or Part 6 of Schedule 12, Amount Respecting Resources for Québec, where applicable.

Additional Information

For more information, read section 1 of the Legislative Proposals Relating to Income Tax and Other Legislation published on July 30, 2019.

Note: You can use the client filter and diagnostic template provided to identify the Corporate Taxprep 2019 files affected by this problem. To learn how to install this template, consult the following article: How to install the client filter and diagnostic template.

This measure will be integrated in Corporate Taxprep 2019 v.2.0 as well as in CCH iFirm Tax T2 2019 v.2.0.
 
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 Solution Id Troubleshooting-T22019-003-Schedule-12-Incorrect-calculation-of-the-deduction-in-respect-of-the-accelerated-Canadian-development-expenses-and-accelerated-Canadian-oil-and-gas-property-expenses-when-the-taxation-year-is-less-than-51-weeks
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