After you claim
If your claim is accepted as filed, you will be notified on your notice of assessment or reassessment.
On this page
- If a recapture of your credit is required
- If your claim needs a review
- If you disagree with our decision
If a recapture of your credit is required
An amount of the credit you have already received may have to be recaptured in a tax year for CTM property you acquired in the year or in any of the previous 10 calendar years, if the CTM property was:
- Converted to a non-CTM use
- Exported from Canada
- Disposed of
The recapture amount is calculated based on the proportion of the value of the property that was used before its conversion to a non-CTM use, its export, or its disposition.
This recapture amount will not exceed the CTM ITC associated with the particular property.
When recapture applies to a CTM property
When recapture applies to a CTM property, you must add to your tax otherwise payable for the year, the lesser of:
- The amount of the CTM ITC
- The amount determined by the formula A × (B ÷ C), where
- Variable A is the amount of your CTM ITC for the particular property
- Variable B is:
- The proceeds of disposition of the property (if the property is disposed of to an arm’s length person or partnership), or
- The fair market value of the property (in any other case)
- Variable C is the capital cost of the property on which the CTM ITC was deducted
Both taxpayers and partnerships must report this to the CRA in prescribed form and manner by the taxpayer’s filing due-date for the year in which the recapture event occurs or, in the case of a partnership, on or before the day when a return is required by section 229 of the Income Tax Regulations to be filed for the fiscal period of the partnership in which the recapture event occurs.
Deferring recapture on transfers between related taxable Canadian corporations
A taxable Canadian corporation may defer the recapture of a CTM ITC if it transfers CTM property to a related taxable Canadian corporation, and the transferee (the party receiving the property) continues to use the property in a CTM use. This deferral is not available to partnerships.
The transferor (the party transferring the property) must report the transfer to the CRA no later than the transferor’s filing due-date for the tax year in which the transfer occurred. Until the prescribed form to report the non-arm's length transfer is available, include the following information in a letter with your return:
- Capital cost of the property
- Capital cost allowance class
- CTM property asset code and description
- Date the CTM property became available for use
- Date of the transfer
- Name and business number of the non-arm’s length transferee
- Amount of the CTM ITC received by the non-arm’s length transferor
Generally, the transferee is considered to have claimed the credits the transferor received for the property. This ensures that the transferee is subject to recapture if it changes the use of the property to a non-CTM use, disposes of the property, or exports the property.
If your claim needs a review
Some claims may be selected for further review.
If your claim requires a review, it is because the CRA requires further information about the expenditures being claimed.
In some cases, the CRA may request an on-site or virtual meeting to ask further questions or clarify details. You may be asked to provide supporting documents to verify expenses and confirm if you have met the various requirements.
After the CRA finishes reviewing the documents provided, the CRA will provide you with a written summary of the review findings.
If the CRA finds that no changes need to be made to the claim, then no further action is required and the review will be closed.
If the CRA determines that changes need to be made to the claim, you will have 30 days to respond to the written summary of the review findings before the review changes are confirmed and your return is assessed or reassessed.
If you disagree with our decision
If you disagree with the CRA's final decision, you still have some recourse options.
For information about filing an objection, refer to: Resolving disputes
For information about the objection and appeals processes, refer to: Objections and appeal rights under the Income Tax Act