DIEP Form

[PhilOttPub]

I am not clear on how to complete the DIEP form for an individual that operates a business as a sole proprietorship, who has a spouse who is the sole owner of a corporation.  And how does the spouse complete their DIEP form?  For starters, what is the correct answer the question "Are you associated in the fiscal period with one or more EPOPs with which you have entered into an agreement under subsection 1104(3.3) of the Regulations?", where the spouses have agreed on the percentages?  Does that agreement fall under subsection 1104(3.3), or is there some filin g requirement under that section?

[Geo123]

Hello PhilOttPub,

Immediate expensing and CCA are optional deductions from CRA’s perspective.
For eligible property acquired and available for use from January 1, 2022, until December 31, 2024.
Designated Immediate Expensing Property (“DIEP”) generally includes all depreciable capital property, other than property included in Capital Cost Allowance (CCA) classes 1 to 6, 14.1, 17, 47, 49 and 51.
In addition, DIEP must meet EITHER of the following conditions:
•    The property has not been used for any purpose before it was acquired by the eligible person AND is not a property for which CCA was claimed by any person or partnership before the property was acquired OR
•    The property was not transferred on a rollover basis OR acquired from a non-arm’s length party.
The maximum deduction is equal to the lesser of:
•    The immediate expensing limit for the taxation year ($1.5 million subject to the allocation requirements among the associated group and pro-rated for short taxation year)
•    The UCC of the DIEP before claiming any CCA deductions for the year.
If the business is operated personally or in a partnership, immediate expensing cannot be used to create or increase a loss, but it can be used to reduce taxable income of the business in which the property is used to zero. In many cases an individual taxpayer would want to make use of the lowest tax brackets and their personal tax credits, so it may be prudent not to claim all of the immediate expense deduction that is available.
If an asset is bought and sold in the same taxation year the property will not qualify as a DIEP.
To claim, “Immediate expensing”, please follow the steps below:
1.    In your business statement, either a T2125 Statement of Business or Professional Activities or in your T776 Statement of Real Estate Rentals, select your CCA category. 
2.    Enter the asset as a new addition under the heading: 
a.    “Dates (dd-mm-yyyy), Description and amount of capital additions  (other than AIIP)”  or
b.    “Dates (dd-mm-yyyy), Description and amount of capital additions of AIIP”
3.    On the line “Limit the eligible amount for immediate expensing of capital additions (other than AIIP), or on the line ““Limit the eligible amount for immediate expensing of capital additions of AIIP”, enter the amount you wish to claim for your immediate expense.  
All capital additions made after December 31, 2021 will be considered eligible for immediate expensing.
Please enter $0 within the addition type limit if you do not want to claim the immediate expensing.
4.    The amount will appear in column 9 of Area A and on line 9936 of your business statement.
Note: the amount claimed will be the lesser of column 9 and column 18 of Area A of the CCA Class.
https://www.canada.ca/en/department-finance/news/2022/02/expansion-of-the-eligibility-for-tax-support-for-business-investments.html

You must also complete the DIEP Agreement – even if you are the sole owner and proprietor 
Use this page if you are an eligible person or partnership
Example – sole propreitor
Agreement between associated eligible persons or partnerships (EPOPs)
Federal
*Are you associated in the fiscal period with one or more EPOPs with which you have entered into an agreement under subsection 1104(3.3) of the Regulations? >>Yes
Select the type of EPOP Applicant person
Percentage of immediate expensing limit assigned to each associated eligible person or partnership (EPOP) 100%
 Signing date and title or position of signing officer 01-01-2022 Owner
 
For residents of Quebec Form TP-130.AD-V will be generated in your tax return. 
The amount will appear on line 460 of your TP-80 Business or Professional Income and Expenses.
The amount claimed will appear on line 393 of your TP-128 Income and Expenses Respecting the Rental of immovable property.
For more information on this topic, please visit the website below: 
https://www.revenuquebec.ca/en/businesses/income-tax/partnerships-and-income-tax/principal-changes-for-2022-in-the-partnership-information-return/
https://www.canada.ca/en/department-finance/news/2022/02/expansion-of-the-eligibility-for-tax-support-for-business-investments.html
 

[PhilOttPub]

Geo123:  Thanks for your prompt reply.  Unfortunately, it does not address my concerns (it seems very similar to a reply on another thread that I had just read before posting my query).   I also looked at both URLs referenced, but they do not appear to address my concerns. In my case, there are two associated entities: One person is a sole proprietor, and their spouse owns a corporation.  It appears from my reading that the sole proprietorship and the corporation must split the allowable immediate expense limit.  Is this correct?  If so, we want the sole proprietorship to have 10% and the corporation to have 90%.  My question is "How do we complete the DIEP agreement form to achieve this result" for each spouse?

[PhilOttPub]

Apologies ... I just realized that, since I had read an earlier topic on DIEP, I posted this in the wrong forum.  Moderators, could you please move this thread to UFIle for Windows?  Perhaps the question makes more sense there??