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How is T2124 information transfered?

Expert: Jim Innes

Steve asked:

Up until this past year, I have been running a home-based business doing drafting services. However, this past year I stopped doing the drafting and from this point forward, my wife will be going forward with the company (as I am employed full-time elsewhere).

How do I transfer my T2124 information to her name on the taxes, in order to carry forward the capital cost allowances?

Jim Innes answered:

In the last year of your business, being the year that you transferred the business to your wife, you should report each of the assets as being disposed of for a value equal to the tax value of the asset, for most items that would be the undepreciated capital cost as reported on your S8.

Your wife would report that she acquired these assets for the same value as you used as your proceeds. Both of these steps are done on your respective schedule S8s of your personal tax return.

For example, if the value of your computer equipment is $1,000 on the S8 you would report a disposition and proceeds of $1,000. She would report that she acquired a computer for $1000.

You should also know that when you purchase an asset the amount you claim as a deduction in the first year is often reduced to one-half of the regular rate, this is referred to as the half rate rule. This rule would not typically apply where your wife purchased assets from you.

About the author

Jim Innes is a Partner at Innes Klayman LLP, Chartered Accountants.

He can be contacted at: 416-590-1728, Ext 314.

His bio page can be viewed here:

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