In an August 31, 2017 Tax Court of Canada case (AON Inc. vs. H.M.Q., 2015-1043(IT)G), at issue was whether over $4,000,000 spent replacing much of a parking garage roof was a current or capital expense. The complex, Citi Centre Place, covered an entire city block. The portion of garage roofing replaced covered about 50% of the garage.
The case discussed 12 common considerations, however, turned on the following key items:
the expenditure in relation to whole cost
whether the repair enhances profitability or value of the asset
On one hand, indications of a capital expenditure were demonstrated by the large cost, the improved lifespan, and the fact that the new roof was simply better. However, the Court opined that the expectation of consistent profitability and value, in combination with the small cost in relation to the building as a whole, were more significant indicators that expenditures were not capital in nature. The expenditures were determined to be current deductible expenses, and not required to be capitalized to the cost of the building.
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