The Canada Revenue Agency (CRA) released their T4002 Self-employed Business, Professional, Commission, Farming, and Fishing Income for 2018 on March 15, 2019, but the print version is not expected to be available on April 2. With the April 30 deadline for paying outstanding taxes coming up quickly, that’s very late notice on rules to claim the massive changes made to Capital Cost Allowance claims for asset purchases after November 20, 2018.
Worse, the relevant folio S3-F4-C1 General Discussion of Capital Cost Allowance, although updated on February 27, still indicates “An update to this Chapter is being prepared for publication.”
Although these changes will affect only a small portion of self-employed taxpayers — those who purchased new depreciable assets after November 20, 2018 — these new rules will be the norm for the next five tax years before they begin to be phased out in tax year 2024. The tax returns prepared this year have to be done right to set up the forms and schedules for the period.
For users of tax software, the software will take care of most of the heavy lifting, but an awareness of the Accelerated Investment Incentive Property (AIIP) rules is still needed to maximize claims.
Late release of forms and instructions for claiming complicated tax rules like these affect taxpayer certainty and compliance. Will the CRA take this into consideration in potential error factors down the line? Time will tell.
Tax specialists can add value by making sure busy self-employed people know they are poised to help with these new rules.
Additional educational resources:The Knowledge Bureau course Tax Accounting for Proprietorships has recently been updated to include these changes. The course also addresses other recent tax changes relevant to proprietors, including those relating to the Canada Pension Plan that begin in 2019.
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