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Tuesday, November 2, 2010

100% Capital Cost Write-Off set to expire Feb 2011!

 

 

Since FY 2009 the Federal budget has been offering a 100% Capital Cost write-off on computers and related software purchased for your small business between January 27, 2009 and February 2011. Prior to this release only 33% was allowed to be claimed as a write off. The equipment must be “General-purpose electronic data processing equipment and systems software for that equipment.” This includes, all POS equipment as well as related Software.

 

If you are in the market to upgrade your existing system or to purchase new equipement, now is the time to take advantage of this rare tax benifit, before it expires. Please see below for complete release from the CCA website:

 

 

Budget 2009 proposes a temporary 100-per-cent CCA rate for eligible computers and software acquired after January 27, 2009 and before February 2011. This 100-per-cent CCA rate will not be subject to the half-year rule, which generally allows half the CCA write-off otherwise available in the year the asset is first available for use by the taxpayer. As a result of this measure, a business will be able to fully deduct the cost of an eligible computer (including the systems software for that computer) in the first year that CCA deductions are available.

For this purpose eligible computers and systems software acquired by a taxpayer will be computer equipment and software described in Class 50 of Schedule II to the Income Tax Regulations, as described above, that

  • is situated in Canada,
  • is acquired by the taxpayer
    • for use in a business carried on by the taxpayer in Canada or for the purpose 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, and
  • has not been used, or acquired for use, for any purpose before it is acquired by the taxpayer for use in Canada.

The 100-per-cent CCA rate will also apply to property that is currently included in CCA class 29, that would otherwise be described in Class 50 of Schedule II to the Income Tax Regulations, and that meets the conditions described above.

The computer tax shelter property rules, which prevent CCA deductions from being used by investors to shelter other sources of income, will also apply to computer equipment that is eligible for the 100-per-cent CCA rate.

 This temporary measure could result in some limited adverse environmental effects to the extent that computer equipment that is being replaced is not stored, reused, recycled or disposed of in an environmentally-friendly manner. However, there are a number of government and industry programs that encourage re-use and proper disposal of electronic equipment.

To find out more visit CCA Web site at http://www.budget.gc.ca/2010/plan/chap5-eng.html