CCA Class 52 - 100%

by Liberty
(Okanagan Valley, BC)

Hi Lake,

How does this Computers CCA Class 52 - 100% Tax Deductible Computer exactly works in the books?

Does it mean that we can expense out 100% the computer equipment and system software (except operating software) at the time of purchased regardless of its total value?

Or does it mean that it still have to be amortized/depreciated over 12 months from the date of purchased

Thanks so much.

Liberty, Okanagan Valley

Hey,

Take a look at the forum post Class 52 versus Assets.

This post pertained to a corporation ... but parts of it are still pertinent to sole proprietors.

What you need to distinguish in your mind is that CCA relates to your tax return and does not always translate to how to record something in your bookkeeping records.

What do I mean by that? Well, you cannot expense your computer. It is an asset that has a life longer than a one year period. This means you need to capitalize it. In this instance, even CRA frowns on expensing items that should be capitalized.

Once you capitalize it, then you choose your method of amortization. If you are following GAAP, your method of amortization would not be CCA. However, if you choose to depart from GAAP and select the same accelerated method of amortization as your tax rate class 52, then yes, amortizing it over 12 months makes sense.

One last thing to keep in mind ... just because CRA says you can amortize the purchase on your tax return at 100% does not mean you have to do this. Read another forum post on Computer 100% Write-off. You will find a link that explains why you may not want to take advantage of CRA's offer of 100% CCA in the current year.




P.S. I would like to remind you there is a difference between information and advice. The general information provided in this post or on my site should not be construed as advice. You should not act or rely on this information without engaging professional advice specific to your situation prior to using this site content for any reason whatsoever.