The taxpayer (the “Trust”) had losses for its 1997 to 2003 taxation years as a result of CCA claimed on its principal asset (a Class 13 asset). In 2017, it disposed of that asset for nominal proceeds, and claimed a terminal loss for that year on the basis that the asset’s undepreciated capital cost should be increased to reflect reduced CCA claims for its 1997 to 2003 taxation years (being such claims as would reduce the claimed losses to nil).
In finding that such CCA claims could not be treated as having been revised, Webb JA noted (at para. 36) that “Nassau Walnut … drew a distinction between an election and a designation” and found (at para. 41) that “the comments in Nassau Walnut with respect to an election, and the inability of a taxpayer to change an election absent a specific provision in the Act permitting such a change, are applicable in this case.” He further stated (at paras. 38, 49):
The choice made by the Trust in deciding what amount of CCA to claim in each year is akin to an election as described above by this Court. … If the Trust would have had sufficient income within the relevant time period to use the non-capital losses, then it would have benefited from carrying these non-capital losses forward to the year of profitability. In effect, the Trust would have been entitled to use several years of CCA to reduce its income, rather than only the CCA for the year in which it had a profit. …
If the Trust is permitted to revise its earlier claims for CCA, this would defeat the purpose chosen by Parliament of having non-capital losses only available for a particular period of time. Having chosen to claim the amounts of CCA as it did in each of the years, the Trust must accept the consequences that flow from having made those choices. The Trust is attempting to revive non-capital losses that it cannot otherwise claim by converting these non-capital losses into a terminal loss in 2017.