A renovation or alteration is made to a depreciable property, originally acquired in a taxation year ending prior to November 21, 2018, that does fall under Class 54 ,55 or 56, and that will be available for use before 2028. Capital cost allowance (“CCA”) was deducted in a taxation year ending before the renovation or alteration was made.
Would the renovation or alteration be considered accelerated investment incentive property (“AIIP”)?
In finding that Reg. 1104(4)(a) was satisfied, CRA stated that it:
considers there to have been an acquisition of property when there is an alteration or renovation to a particular depreciable property, even if this alteration or renovation represents an addition to an already existing property.
In also indicating that Reg. 1104(4)(b) would generally be deemed by Reg. 1104(4.1) to be satisfied, provided that “no CCA or terminal loss had been deducted in respect of the alteration or renovation by any person or partnership for a taxpayer year ending before the property was acquired by the taxpayer,” so that the renovation or alteration would generally be expected to qualify as AIIP, CRA stated:
Where CCA or terminal loss amounts have been deducted in respect of the depreciable property in a taxation year prior to the alteration or renovation to the property, subparagraph 1104(4.1) may deem the amounts to have been deducted in respect of a separate property that is not part of the of the particular depreciable property. Subsection 1104(4.1) will apply when the amounts deducted for CCA or a terminal loss can reasonably be considered to have been deducted in respect of amounts for acquisitions incurred either before November 21, 2018, or incurred after November 20, 2018, if any portion of the particular property is considered to have become available for use before the time that the particular property is first used for the purpose of earning income.