Global

Details

  • Service: Tax, International Corporate Tax, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 2/4/2013

Canada - Purchase price allocation between land and buildings 

February 4: The Tax Court of Canada (TCC) held for the taxpayer in a case concerning the purchase price allocation of property with land and a rental building.

However, when the decision is compared to the Canada Revenue Agency (CRA) assessment, the benefit to the taxpayer was only an additional $30,000* allocated to the building from the land that can be amortized over time.


$ = Canadian dollars


Although this case—Sunrise Realty Investments Limited v. The Queen—was heard under the court's informal procedure (and thus does not set precedent), tax professionals have observed it is interesting because it includes a copy of a portion of the CRA's valuation report.


The case also serves as a reminder that taxpayers need to be able to justify their purchase price allocation between land and building.


Read a January 2013 report prepared by the KPMG member firm in Canada: Sunrise Realty - TCC Disagrees with CRA's Appraisal of Land vs. Building Costs




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