Is a septic bed depreciable, a direct expense or an addition to the cost of land? If depreciable, what CCA class is it?
Thanks for your help.
Without any research, I think I would add it to the capital cost of the building.
Assuming it is a legitimate allowable outlay for tax purposes (incurred for the purpose of earning income from business or property), you might be able to claim the septic bed in Class 8. There is a case, Henkels v Her Majesty the Queen (2009), where the judge discusses a new well (not a septic bed but not far off). The judge stated that
“The water well was 285 feet away. It was a separate structure altogether, and though a water supply is clearly critical, that does not make the well a part of the house. It is physically separate and I find more logically fits into the catchall class 8, which is 20%.”
Just something to consider.
At this point there is no building.
This is alegitimate outlay. The property is being used within the business.
I understand the catch-all of Class 8, but the reasonable life of a septic bed is at least 15 years. Mine is still working well after 43 years and 25 of those years it serviced a 100 seat restaurant!
Yes, I understand the reasonable life issue. The judge’s decision in this case was not based on the expected life of the asset. It was based on his feeling that the well (or the septic tank in your case) was far enough away from the house to warrant it not being considered part of the house. This was even with the realization that a well/water system is integral to the functioning of the house. Therefore, since there is no identifiable CCA class for the asset, and it isn’t part of the Class 1 building, then it falls to Class 8 which is a “catch-all” class. The first sentence of the Class 8 description is “… includes certain property that is not included in another class”. They give examples of potential inclusions but that is not an exclusive list.
Remember that CCA is not mandatory - you can put the septic bed into Class 8, then take a lesser amount of CCA (i.e. 2%) if you want. You’d have to do the calculation yourself and manually override the nominal 20% calculation, but it would be allowable for tax purposes.