CANADA Law and Practice Contributed by: Rachel V Hutton, Michael L Dyck, Mario Paura and Miguel Manzano, Stikeman Elliott LLP
for and is granted a clearance certificate by the Canada Revenue Agency in advance of the date the property is disposed of. In addition, a non- resident must notify the Canadian tax authorities about a disposition of TCP either before they dispose of the property or within ten days fol - lowing the disposition. VAT on Rent For a discussion of VAT on rent, see 6.7 Pay- ment of VAT . 8.5 Tax Benefits In computing net rental income (ie, where income is earned by a resident entity, where rental income earned by a non-resident constitutes business income, or where a Section 216 elec - tion has been made by a non-resident earning property income), certain expenses incurred in earning such income may generally be deducted for the purposes of calculating Canadian income tax, including operating expenses, reasonable financing costs and tax depreciation.
Tax depreciation may be claimed on buildings and other depreciable property used to earn rental income. Tax depreciation is allowed gener - ally at rates varying from a 4% to 10% declining- balance rate on buildings and other structures. The amount claimed is discretionary, and claims may be made in whole or in part, although tax depreciation generally cannot be used to create or increase a rental loss. The rate in the year of acquisition is generally one-half of the rate oth - erwise available.
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