Question

Item 6 - Class 13 The 2017 improvements are being written off over 8 years, the original term of the lease 6 years), plus the renewal of 2 years. This means that the CCA rate for these improvements is 12.5 percent. Based on this and applying the first year rules means that, during the years 2017 and 2018, 18.75 percent of the asset's capital cost was written off leaving a balance of 81.25 (100.00% - 18.75%)] at the beginning of 2019. This means that the original capital cost of the improvements was $184,000 ($149,500 = 8125). Based on this the required calculations would be as follows: $149,500 75,000 $224,500 January 1, 2019 UCC Additions CCA Base ССА: 2017 ($184,000 = 8) 2019 Improvements Including AccII Adjustment ((150%)($75,000) = 6] January 1, 2020 UCC Balance ($23,000) (18.750) ( 41,750) $182,750

Canadian Taxation Class 13 - Leasehold Improvement

How to get 12.5 % and 18.75 % to find 184 000 in 2017

Answer 1

Life of asset is 8 years. Depreciation for each year = 100%/8 years = 12.5% of cost for each year.

First year depreciation is only half of allowable depreciation. Second year depreciation is fully allowed.

For 2017 and 2018 depreciation taken = half of 12.5% for 2017+ whole of 12.5% for 2018 = 12.5%/2 + 12.5% = 18.75%

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