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

Capacity Recalculation

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

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  • CRA confirmed that the corporate group must determine excess capacity using two applicable calculation methods.
  • The calculations cover any pre-regime excess capacity and the first regime year's excess capacity.
  • First determination: use the 40% ratio of permissible expenses.
  • This 40% ratio generally applies to taxation years beginning on or after October 1, 2023 and before January 1, 2024.
  • The first determination establishes the taxpayer's cumulative unused excess capacity (CUEC) for those years.
  • Second determination: use the 30% ratio of permissible expenses.
  • This 30% ratio applies to subsequent taxation years.
  • The second determination establishes the taxpayer's cumulative unused excess capacity for those subsequent years.
  • The relevant subsequent taxation years are 2024, 2025 and 2026.
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Capacity Recalculation

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Une erreur comptable peut-elle entraîner un impôt supplémentaire?

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"In particular, CRA confirmed that the corporate group would need to determine any pre-regime excess capacity and any first regime year’s excess capacity twice: once using the 40% ratio of permissible expenses that generally applies for taxation years beginning on or after October 1, 2023 and before January 1, 2024 for purposes of determining the taxpayer’s cumulative unused excess capacity (CUEC) for those years; and a second time using the 30% ratio that applies for subsequent taxation years, for the purpose of determining the taxpayer’s cumulative unused capacity for those subsequent years (relevantly, for taxation years beginning in 2024, 2025 and 2026)."

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