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Billed-basis accounting for professionals

For taxation years that begin after March 21, 2017, a taxpayer carrying on a designated professional business cannot use billed-basis accounting. Using billed-basis accounting means you exclude amounts for work in progress at the end of a tax year from your business income for that year.

A designated professional business means a business that is the professional practice of an accountant, dentist, lawyer (including a notary in the province of Quebec), medical doctor, veterinarian, or chiropractor. The taxpayer carrying on the designated professional business may be a corporation or an individual practising alone or as a member of a partnership.

If you elected to use billed-basis accounting in your last taxation year that begins before March 22, 2017, the inclusion of work in progress into your income is phased in as follows:

  • for your first taxation year that begins after March 21, 2017, 20% of the lesser of the cost and the fair market value of work in progress will be taken into account for the purposes of determining the value of inventory held by the business under the Income Tax Act
  • for your second taxation year that begins after March 21, 2017, 40% of the lesser of the cost and the fair market value of work in progress will be taken into account for the purposes of determining the value of that inventory
  • for your third taxation year that begins after March 21, 2017, 60% of the lesser of the cost and the fair market value of work in progress will be taken into account for the purposes of determining the value of that inventory
  • for your fourth taxation year that begins after March 21, 2017, 80% of the lesser of the cost and the fair market value of work in progress will be taken into account for the purposes of determining the value of that inventory
  • for each subsequent taxation year, the full amount of the lesser of the cost and the fair market value of work-in-progress will be taken into account for the purposes of valuing that inventory

Guide T4003, Farming and Fishing Income

Guide T4003, Farming and Fishing Income, is no longer published. It was replaced by Guide T4002, Self-employed Business, Professional, Commission, Farming, and Fishing Income. This guide now includes tax information for farmers, fishers, and all other types of self-employment income.

Eligible capital property

On January 1, 2017, the eligible capital property system was replaced with the new capital cost allowance (CCA) class 14.1 with transitional rules. Under the old system, eligible capital expenditures are added to the cumulative eligible capital pool at a 75% inclusion rate, and the rate of depreciation of those expenditures is 7% on a declining-balance basis. Under the new system, newly-acquired eligible properties will be included in class 14.1 at a 100% inclusion rate with a 5% capital cost allowance rate on a declining-balance basis.

For each taxation year that ends before 2027, additional deductions for CCA will be allowed for property acquired before January 1, 2017. This property will be included in class 14.1.

Investment tax credit for child care spaces

Budget 2017 has eliminated the investment tax credit for child care spaces. This measure will apply to expenditures incurred on or after March 21, 2017. For more information, see Investment tax credit for child care spaces.

Submit additional documents online

Do you need to send supporting documents to the CRA after you file your income tax and benefit return? You can now submit documents online through one of the following secure online service portals:

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