Troubleshooting – 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: 2019-08-06

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

Cantax T2 19.1.3xx.100
Cantax T2 19.1.3xx.106
 

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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Note that if the corporation has a permanent establishment in Alberta, that same calculation must be performed considering the expenses specific to this province. The result should then be entered in the corresponding field in the Area D section of the AT1 Schedule 15.

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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Note that if the corporation has a permanent establishment in Alberta, that same calculation must be performed considering the expenses specific to this province. The result should then be entered in the corresponding field in the Area E section of the AT1 Schedule 15.

Additional Information

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

This measure will be integrated in Cantax T2 19.2.3xx.126.
 
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