Proposal for the treatment of class 13 assets.

Position:Comments submitted on Nov 25, 1997 by Tax Executives Institute to the U.S. Dept. of Finance regarding accounting method for class 13 assets

On November 25, 1997, Tax Executives Institute filed comments with the Department of Finance proposing a legislative change in respect of the treatment of capital cost allowances (CCA) for leasehold improvements (Class 13 assets). The comments, which took the form of a letter from TEI President, Paul Cherecwich, Jr., to Len Farber, Director of the Tax Legislative Division for the Department, underscore the Institute's longstanding concerns about the administrative burdens engendered by the asset-by-asset accounting approach required currently. TEI's proposal for a simplified, diminishing aggregate balance pool system, comparable to that employed for other depreciable business assets, would minimize those burdens with likely no revenue cost to the government.

TEI's comments were prepared under the aegis of its Canadian Income Tax Committee, whose chair is Alan Wheable of Canada Trust. Yves Magnan of the Laurentian Bank of Canada contributed substantially to the development of the Institute's Position and comments.

During the 1996 annual liaison meeting between Tax Executives Institute, Inc., and the Department of Finance, TEI recommended that the Department of Finance consider adopting a diminishing balance aggregate pool system that would permit taxpayers to recover the capital cost of leasehold improvements made to real property made by, or on behalf of, the tenants. In response, the Department invited the Institute to survey its members and recommend an appropriate life for such assets. The purpose of this letter is to confirm the Institute's prior position and recommend a specific computational method and life.


Tax Executives Institute is the principal association of corporate tax executives in North America. The Institute's 5,000 professionals manage the tax affairs of the leading 2800 companies in Canada and the United States and must contend daily with the planning and compliance aspects of Canada's business tax laws. Canadians make up 10 percent of TEI's membership and, whereas the comments set forth in this letter reflect the views of the Institute as a whole, the comments are grounded in the experience of our Canadian constituency. TEI is committed to maintaining and improving a tax system that works -- one that effectively implements sound tax policy, that is administrable by Revenue Canada, and that does not impose undue compliance or recordkeeping burdens on taxpayers. We believe that our proposal for a revised system...

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