[allant]

A corporation whose principal business is renting property is allowed to claim CCA to create or increase a loss. In schedule 8 (class), however, if I answer “Yes” in the Rental property box, the program restricts the CCA to the profit. I can get around this by saying “No” to the rental property question or overriding the CCA entry in schedule 7, but either way seems awkward. Is there a neater way of doing this?

[spenceh]

allant, on 13 January 2011 - 01:13 PM, said:

A corporation whose principal business is renting property is allowed to claim CCA to create or increase a loss. In schedule 8 (class), however, if I answer “Yes” in the Rental property box, the program restricts the CCA to the profit. I can get around this by saying “No” to the rental property question or overriding the CCA entry in schedule 7, but either way seems awkward. Is there a neater way of doing this?

You can always use overrides even to the point where they are in violation of the Income Tax Act and/or Regulations.

From CRA's website:

Limits on CCA

In the year you acquire rental property, you can usually claim CCA only on one-half of your net additions to a class. This is the half-year rule (also known as the 50% rule) which we explain under Column 6 - Adjustment for current-year additions. The available-for-use rules may also affect the amount of CCA you can claim. See Definition.

In the year you dispose of rental property, you may have to add an amount to your income as a recapture of CCA. Conversely, you may be able to deduct an amount from your income as a terminal loss. We explain recapture and terminal loss under Column 5 - UCC after additions and dispositions .

If you own more than one rental property, you have to calculate your overall net income or loss for the year from all your rental properties before you can claim CCA. Include the net rental income or loss from your T5013 or T5013A slip in the calculation if you are a partner. Combine the rental incomes and losses from all your properties, even if they belong to different classes. This also applies to furniture, fixtures, and appliances that you use in your rental building. You can claim CCA for these properties, the building, or both.

You cannot use CCA to create or increase a rental loss.

[JohnNP2]

sorry spenceh, allant could be correct - it is possible (depending on the exact circumstances) that the exception for that corp for R1100(11) could be at R1100(12)(a)


(i have noted before that the cra website is oversimplifed, though somebody as recently as yesterday failed to believe me in the blue forum ;) )


presumably profile does not cater for R1100(12) directly

[allant]

JohnNP2, on 13 January 2011 - 11:45 PM, said:

sorry spenceh, allant could be correct - it is possible (depending on the exact circumstances) that the exception for that corp for R1100(11) could be at R1100(12)(a)


(i have noted before that the cra website is oversimplifed, though somebody as recently as yesterday failed to believe me in the blue forum ;) )


presumably profile does not cater for R1100(12) directly

[allant]

Yes, I am relying on Reg. S.1100(12) which says that “subsection (11) [the rental property CCA restriction] does not apply in respect of a taxation year of a taxpayer that was throughout the year ... a corporation whose principal business was the leasing, rental, development or sale or any combination thereof, of real property owned by it”.
Clarence Byrd's Canadian Tax Principles is very clear: “This restriction [the rental property CCA restriction] does not apply to a corporation ... whose principal business throughout the year is the rental or sale of real property.” In the case I am dealing with, the corporation has nothing but one rental property.
So my question still is whether there's a neater way of doing this rather than overrriding.

[Jim]

I agree, SPG, you beat me to the reply. Also, the rental income for a principal business corporation does not go on schedule 7.