Definition:
That new computer hardware and related systems software that you bought are a business tax deduction in Canada. But how much of one depends on when you bought it. Here are the Capital Cost Allowance (CCA) rules for the computer tax deduction.
- Computer hardware and systems software for that equipment, including ancillary data-processing equipment, acquired after March 22, 2004, and before March 19, 2007 is in Capital Cost Allowance Class 45 with a CCA rate of 45%.
- Computer hardware and systems software for that equipment, including ancillary data-processing equipment, acquired after March 18, 2007 is in Capital Class Allowance Class 50 with a CCA rate of 55%.
- Computer hardware and systems software acquired after January 27, 2009, and before February 1, 2011 is in Capital Class Allowance Class 52 with a CCA rate of 100%.
The really great thing about this computer tax deduction is that the half-year rule is waived, meaning that you aren't forced to only write off half of the Capital Cost Allowance allowed on your computer and/or systems software the year you purchase it but can write off the full Capital Cost Allowance as a business tax deduction right away.
To be eligible for the computer tax deduction, no matter when you purchased the equipment, it must:
- be situated in Canada;
- not have been used, or acquired for use, for any purpose before it is acquired by the taxpayer; and
- be acquired by the taxpayer:
for use in a business carried on by the taxpayer in Canada or for the purposes of earning income from property situated in Canada; or - for lease by the taxpayer to a lessee for use by the lessee in a business carried on by the lessee in Canada or for the purpose of earning income from property situated in Canada (Canada Revenue Agency).
Common Misspellings: Computer tax deducton, computer tax deducshun.
Examples:
Business people who purchase computer hardware and systems software after January 27, 2009, and before February 1, 2011 will enjoy a computer tax deduction almost fifty percent greater than if they purchased their computer equipment at any other time.
