,canada ,cu/oms                       #a
& ,rev5ue ,ag5cy

          ,9t]pret,n ,bullet9
    
,subject3 ,9come ,tax ,act--,capital
  ,co/ ,all[.e ,deprecia# ,prop]ty
,numb]3 ,,it-#abh;,r
,date3 ,may #ba1 #aihe
,ref];e3 ,p>agraphs #bj7#a77a7 &
  #ac7#ba77b7 7al ,regul,ns #aajb7#a77

  ,? ,bullet9 replaces & c.els
,9t]pret,n ,bullet9 ,,it-#abh issu$ on
,octob] #bi1 #aigc4 ,revi.ns ( sub/.e >e
designat$ 0v]tical l9es4

#a4 ,! classes ( prop]ty describ$ 9 ,"p
  ,,xi (! ,regul,ns & 9 ,s*$ule ,,ii 9
  respect ( : capital co/ all[.es >e
  deducti# "u p>agraph #bj7#a77a7 9
  -put+ 9come d n 9clude prop]ty t 0 n 9
  fact acquir$ 0! taxpay] or prop]ty
  li/$ 9 ,regul,n #aajb7#a71 a "pial li/
  ( : 9cludes                         #a
              ,,it-#abh;,r           a#a
  7a7 prop]ty ! co/ ( : is deducti# 9
    -put+ ! taxpay]'s 9come4
  7b7 prop]ty t is describ$ 9 !
    taxpay]'s 9v5tory4
  7c7 prop]ty t 0 n acquir$ =! purpose (
    ga9+ or produc+ 9come4
  7d7 prop]ty t 0 acquir$ 0an exp5diture
    9 respect ( : ! taxpay] is all[$ a
    deduc;n "u sec;n #cg4
  7e7 prop]ty t 0 acquir$ af ,novemb]
    #ab1 #aiha t is
    7;i7 a pr9t1 et*+1 draw+1 pa9t+1
      sculpture1 or o!r simil> "w ( >t1
      ! co/ ( : 6! taxpay] 0 n less ?an
      4#bjj1
    7;ii7 a h&-wov5 tape/ry or c>pet or
      a h&made applique1 ! co/ ( : 6!
      taxpay] 0 n less ?an 4#bae p]
      squ>e metre
    7;iii7 an 5grav+1 et*+1 li?ograph1
      woodcut1 map or *>t1 made 2f
      #aijj1 or
    7;iv7 antique furniture1 or any o!r
      antique object1 produc$ m ?an   #b
              ,,it-#abh;,r           b#a
      #ajj ye>s 2f ! date x 0 acquir$1 !
      co/ ( : 6! taxpay] 0 n less ?an
      4#a1jjj1
    o!r ?an prop]ty t 0 acquir$ f a
    p]son ) :om ! taxpay] 0 n d1l+ at
    >m's l5g? 7o!rwise ?an 0virtue (a "r
    ref]r$ 6in p>agraph #bea7#e77b77 at
    ! "t ! prop]ty 0 acquir$ if !
    prop]ty 0 acquir$ 9 circum/.es ": !
--------------------------------------#b
    provi.ns ( ,regul,n #aajb7#ad7 7
    applica#1 & o!r ?an prop]ty describ$
    9 7;i7 or 7;ii7 abv t 0 cr1t$ 0an
    9dividual :o 0 a ,canadian1 z def9$
    0,regul,n #aajd7#aj77a71 at ! "t !
    prop]ty 0 cr1t$4
  7f7 prop]ty t is a camp1 ya*t1 lodge
    or golf c\rse or facil;y acquir$ af
    ,decemb] #ca1 #aigd 7subject 6!
    transi;nal rules 9 ,regul,n
    #aajb7#ag77 if any \tlay or exp5se
    =! use or ma9t5.e ( t prop]ty is n
  
                                      #c
              ,,it-#abh;,r           a#b
    deducti# 0virtue ( p>agraph
    #ah7#a77l7 7al see ,,it-#adh;,r#b74
  7g7 prop]ty 9 respect ( : a capital
    co/ all[.e =! purposes ( p>agraph
    #bj7#a77a7 is claim$ & p]mitt$ "u
    ,"p ,,xvii (! ,regul,ns 0a f>m] or
    fi%]man4
  
                ,[n]%ip
    
#b4 ,capital co/ all[.e may only 2
  claim$ 9 respect ( capital exp5ditures
  made 9 respect ( prop]ty [n$ 0!
  taxpay] or 9 : ! taxpay] has a
  l1sehold 9t]e/4 ,9 ? 3nec;n x is
  important 6note t 9 -put+ ! 9come (a
  "pn]%ip1 subsec;n #if7#a7 & ,regul,ns
  #aajb7#a;a7 require t "pn]%ip prop]ty
  79clud+ deprecia# prop]ty7 2 a3.t$ = z
  if x 7 [n$ at ! "pn]%ip level4
#c4 ,9 mo/ 9/.es1 ": a taxpay] 9curs a
  co/ 9 respect (a capital asset1 [n]%ip
  ( or a l1se 6t asset w 2 obta9$ ei at
  ! "t ! co/ 0 9curr$ or at a lat]    #d
              ,,it-#abh;,r           b#b
  date4 ,h["e1 "! may 2 circum/.es 9 :
  nei a freehold nor a l1sehold 9t]e/ 9
  ! prop]ty is acquir$4 ,if a taxpay]
  3/ructs & 9curs ! co/ (a /ructure on
  l& [n$ 0ano!r p]son1 or o!rwise
  9corporates an asset 96prop]ty [n$
  0ano!r z an 9tegral "p "!(1 & does n h
  a l1sehold 9t]e/ 9 or [n]%ip (! asset1
  capital co/ all[.e may n 2 claim$ 9
  respect ( s* prop]ty4 ,? w 2 ! case ":
  a road provid+ a3ess 6a taxpay]'s
  plant is built at ! taxpay]'s exp5se
  on l& [n$ 0a municipal;y4 ,al1 capital
  exp5ditures = >*itectural & 5g9e]+
  s]vices 9 prep>+ plans & e/imates =
  new plants1 or = a4i;ns 6exi/+ plants
  or o!r 3/ruc;n "w (a capital nature1
  >e n subject 6capital co/ all[.e if !
  "w = : ! plans & e/imates 7 prep>$ is
  n c>ri$ \4 ,h["e1 an exp5diture ( ?
  nature may 2 an eligi# capital
  exp5diture 7def9$ 9 p>agraph
  #ad7#e77b77 = : an all[.e is p]mitt$
                                      #e
              ,,it-#abh;,r           c#b
  0virtue ( p>agraph #bj7#a77b7 (! ,act
  7see ,,it-#adc;,r#b74

        ,capital ,exp5ditures on
       ,deprecia# ,prop]ty v]sus
        ,curr5t ,exp5ditures on
          ,repairs & ,ma9t5.e
    
#d4 ,! foll[+ guidel9es may 2 us$ 9
  det]m9+ :e!r an exp5diture is capital
  9 nature 2c deprecia#
--------------------------------------#c
  prop]ty 0 acquir$ or improv$1 or :e!r
  x is curr5tly deducti# 2c x is 9
  respect (! ma9t5.e or repair (a
  prop]ty3
  7a7 ,5dur+ ,b5efit--,deci.ns (! c\rts
    9dicate t :5 an exp5diture on a
    tangi# deprecia# prop]ty is made 8)a
    view 6br++ 96exi/;e an asset or
    advantage =! 5dur+ b5efit (a trade01
    !n t exp5diture norm,y is look$ ^u z
    2+ (a capital nature4 ,":1 h["e1 x
    is likely t "! w 2 recurr+        #f
              ,,it-#abh;,r           a#c
    exp5ditures = replace;t or renewal
    (a specific item 2c xs use;l life w
    n exce$ a relatively %ort "t1 ? fact
    is "o 9dic,n t ! exp5ditures >e (a
    curr5t nature4
  7b7 ,ma9t5.e or ,bett];t--,": an
    exp5diture made 9 respect (a prop]ty
    s]ves only 6re/ore x 6xs orig9al
    3di;n1 t fact is "o 9dic,n t !
    exp5diture is (a curr5t nature4 ,?
    is (t5 ! case ": a floor or a ro( is
    replac$4 ,":1 h["e1 ! result (!
    exp5diture is 6mat]i,y improve !
    prop]ty 2y xs orig9al 3di;n1 s* z :5
    a new floor or a new ro( cle>ly is (
    bett] qual;y & grt] durabil;y ?an !
    replac$ "o1 !n ! exp5diture is
    reg>d$ z capital 9 nature4 ,:e!r or
    n ! m>ket value (! prop]ty is 9cr1s$
    z a result (! exp5diture is n a
    major factor 9 r1*+ a deci.n4 ,9 !
    ev5t t ! exp5diture 9cludes bo?
    curr5t & capital ele;ts & ^! c 2
    id5tifi$1 an appropriate          #g
              ,,it-#abh;,r           b#c
    alloc,n (! exp5diture is nec4 ,":
    only a m9or "p (! exp5diture is (a
    capital nature1 ! ,de"p;t is prep>$
    6tr1t ! :ole z 2+ (a curr5t nature4
  7c7 ,9tegral ,"p or ,sep>ate ,asset--
    ,ano!r po9t t may h 6be 3sid]$ is
    :e!r ! exp5diture is 6repair a "p (a
    prop]ty or :e!r x is 6acquire a
    prop]ty t is xf a sep>ate asset4 ,9
    ! =m] case ! exp5diture is likely
    6be a curr5t exp5se & 9 ! latt] case
    x is likely 6be a capital \tlay4 ,=
    example1 ! co/ ( replac+ ! ru4] or
    propellor (a %ip is reg>d$ z a
    curr5t exp5se 2c x is an 9tegral "p
    (! %ip & "! is no bett];t2 b ! co/ (
    replac+ a la! 9 a factory is reg>d$
    z a capital exp5diture 2c ! la! is n
    an 9tegral "p (! factory b is a
    sep>ate m>keta# asset4 ,2t s* cle>-
    cut cases "! >e o!rs ": a replac$
    item may 2 an ess5tial "p (a :ole
    prop]ty yet n an 9tegral "p ( x4 ,":
                                      #h
              ,,it-#abh;,r           c#c
    ? is s1 o!r factors s* z relative
    values m/ 2 tak5 96a3.t4
  7d7 ,relative ,value--,! am.t (!
    exp5diture 9 rel,n 6! value (! :ole
    prop]ty or 9 rel,n 6previ\s av]age
    ma9t5.e & repair co/s (t5 may h 6be
    wei<$4 ,? is "picul>ly s :5 !
    replace;t xf cd 2 reg>d$ z a
    sep>ate1 m>keta# asset4 ,:ile a sp>k
    plug 9 an 5g9e may 2 s* an asset1 "o
    wd n"e
--------------------------------------#d
    reg>d ! co/ ( replac+ x z any?+ b an
    exp5se2 b ": ! 5g9e xf is replac$1 !
    exp5diture n only is =a sep>ate
    m>keta# asset b al is apt 6be v
    sub/antial 9 rel,n 6! total value (!
    prop]ty ( : ! 5g9e =ms a "p1 &1 if
    s1 ! exp5diture likely wd 2 reg>d$ z
    capital 9 nature4 ,on ! o!r h&1 !
    rel,n%ip (! am.t (! exp5diture 6!
    value (! :ole prop]ty is n1 9 xf1
    necess>ily decisive 9 o!r
    circum/.es1 "picul>ly ": a        #i
              ,,it-#abh;,r           a#d
    major repair job is d"o : is an
    a3umul,n ( less] jobs t wd h be5
    classifi$ z curr5t exp5se if ea* _h
    be5 d"o at ! "t ! ne$ = x f/ >ose2 !
    fact t !y 7 n d"o e>li] does n *ange
    ! nature (! "w :5 x is d"o1 reg>d.s
    ( xs total co/4
  7e7 ,acquisi;n ( ,us$ ,prop]ty--,":
    us$ prop]ty is acquir$ 0a taxpay] &
    at ! "t ( acquisi;n x requires
    repairs or replace;ts 6put x 9
    suita# 3di;n = use1 ! co/ ( s* "w is
    reg>d$ z capital 9 nature ev5 ?\<1 9
    o!r circum/.es1 x wd 2 tr1t$ z
    curr5t exp5se4
  7f7 ,anticip,n ( ,sale--,repairs made
    9 anticip,n (! sale (a prop]ty or z
    a 3di;n (! sale >e reg>d$ z capital
    9 nature4 ,on ! o!r h&1 ": ! repairs
    wd h be5 made 9 any ev5t &! sale 0
    negotiat$ dur+ ! c\rse (! repairs1
    or af _! -ple;n1 ! co/ %d 2
    classifi$ z ?\< no sale 0 3templat$4
                                     #aj
        ,deprecia# ,assets v]sus     b#d
            ,9v5tory ,assets
    
#e4 ,! ,de"p;t's practice ) respect 6a
  taxpay] :o d1ls 9 a "picul> k9d (
  prop]ty & :o al uses t k9d ( prop]ty =
  "s o!r purpose is 4cuss$ 9
  ,,it-#ajb;,r#b4

     ,build+s ,9cid5t,y ,acquir$ on
            ,obta9+ a ,site
    
#f4 ,": a taxpay] pur*ases r1l e/ate
  9clud+ a build+ &! build+ is torn d[n
  )9 a relatively %ort "t af pur*ase1 !
  "q >ises z 6:e!r ! build+ %d 2 class$
  z deprecia# prop]ty4 ,if ! build+ is
  demoli%$ 0! pur*as] )\t hav+ be5 us$
  6e>n 9come1 ! build+ _c 2 reg>d$ z
  deprecia# prop]ty4 ,al1 ": ! build+ is
  us$ 6e>n 9come = only a %ort "t prior
  6demoli;n1 x is n reg>d$ z deprecia#
  prop]ty un.s ! taxpay] c cle>ly
  e/abli% t ! prime 9t5;n on acquir+ !
  build+ 0 =! purpose ( ga9+ or      #aa
              ,,it-#abh;,r           c#d
  produc+ 9come4 ,! ,de"p;t's practice )
  respect 6! co/s ( demoli%+ a build+
  9cid5t,y acquir$ on obta9+ a site is
  4cuss$ 9 ,,it-#dhe4



















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