Bifalgorithm post · Une erreur comptable peut-elle entraîner un impôt supplémentaire? · CRA confirms that CUEC computed in the first (EIFEL) regime year using a 40% ratio must for carryforward purposes be recomputed using the 30% ratio

Excess Capacity

Excess Capacity (Une erreur comptable peut-elle entraîner un impôt supplémentaire? · CRA confirms that CUEC computed in the first (EIFEL) regime year using a 4…

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  • CRA’s treatment of excess capacity for a pre-regime group member with a different taxation year end
  • The group included members with different taxation year ends and unequal EIFEL excess capacity
  • One member had a September 30 taxation year end
  • The other group members had calendar taxation year ends
  • The September 30 year-end member had significant excess capacity compared with the other members
  • CRA essentially confirmed the applicable excess-capacity treatment
  • The member’s first regime year commenced on October 1, 2023
  • For that first regime year, excess capacity was determined using the 40% ratio of permissible expenses
  • Excess capacity carried forward to subsequent taxation years was recalculated using the 30% ratio applicable to those years
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Excess Capacity

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Une erreur comptable peut-elle entraîner un impôt supplémentaire?

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"Regarding the situation where one member of a pre-regime group had September 30 taxation year ends and significant excess capacity for EIFEL purposes compared to other members of the group, which had calendar taxation year ends, CRA essentially confirmed that the first member would need to determine its excess capacity for its first regime year (commencing on October 1. 2023) using the 40% ratio of permissible expenses, but that excess capacity carried forward to subsequent taxation years would be recalculated using the 30% ratio applicable to those years."

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