Entrepreneurship & Small Business

Approx laptop capital cost deduction for a sole proprietor?

  • Last Updated:
  • Aug 24th, 2018 1:50 pm
[OP]
Sr. Member
Jul 22, 2010
728 posts
109 upvotes
toronto

Approx laptop capital cost deduction for a sole proprietor?

Hi,

I just had a question, so i'm self employed/contractor with a european and I was curious what the approximate amount I would get for deductions? From my readings i assume i would get 55% of the total cost and that would be amortized over 2 years?

Using a concrete example:

new macbook pro = $3,671
class 50 = 55%
so total claimable capital cost is 0.55 * 3,671 = 2,019
divide that by 2 years = 1,009?

Are there any other factors i should consider (how does depreciation factor in)? Also, this would be my work laptop as I already have a personal laptop for use.
7 replies
Sr. Member
Mar 3, 2018
516 posts
294 upvotes
GTA
Year One - 55% of $3,671 X 1/2 = 1,009

Year Two - 55% of (3,671-1,009) = 1,464

Year Three - 55% of (3,671-1009-1464) = 659

And so on till full cost deducted.

Any HST / GST paid on purchase can be used as an ITC when filing HST return.
[OP]
Sr. Member
Jul 22, 2010
728 posts
109 upvotes
toronto
DaveTheDude wrote:
Jul 28th, 2018 6:11 pm
Year One - 55% of $3,671 X 1/2 = 1,009

Year Two - 55% of (3,671-1,009) = 1,464

Year Three - 55% of (3,671-1009-1464) = 659

And so on till full cost deducted.

Any HST / GST paid on purchase can be used as an ITC when filing HST return.
Thanks so much! For year one why is there an "X 1/2"? I just want to make sure i understand


Also, do I need to take account in depreciation or anything like that as well?
Sr. Member
Mar 3, 2018
516 posts
294 upvotes
GTA
Scavos wrote:
Jul 30th, 2018 12:17 pm
Thanks so much! For year one why is there an "X 1/2"? I just want to make sure i understand


Also, do I need to take account in depreciation or anything like that as well?
Capital Cost Allowance (CCA) as above is depreciation for tax purposes. Over time you get to write off the full cost of the laptop.

The 1/2 relates to the half year rule for CCA. Basically means in the year of purchase you can only claim half the CCA deduction. Thus rather then prorate the number of days you owned the laptop in year one they simplify it and just give everyone one half of a full year claim.
[OP]
Sr. Member
Jul 22, 2010
728 posts
109 upvotes
toronto
DaveTheDude wrote:
Jul 30th, 2018 12:57 pm
Capital Cost Allowance (CCA) as above is depreciation for tax purposes. Over time you get to write off the full cost of the laptop.

The 1/2 relates to the half year rule for CCA. Basically means in the year of purchase you can only claim half the CCA deduction. Thus rather then prorate the number of days you owned the laptop in year one they simplify it and just give everyone one half of a full year claim.
ohhh boo, I see. Thanks! Also, quick follow up, if i'm working for a foreign firm/non-canadian, wouldn't i not qualify for filing HST? I'm not charging HST to my foreign clients or does that work differently for expenses/CCA goods?
Sr. Member
Mar 3, 2018
516 posts
294 upvotes
GTA
The rules around HST on services provided in Canada to non residents can be tricky. Generally though most services to non residents qualify for zero rated status. Meaning no HST.

Where no HST is applicable claim the full cost of the laptop including HST when calculating the CCA deduction.
[OP]
Sr. Member
Jul 22, 2010
728 posts
109 upvotes
toronto
DaveTheDude wrote:
Jul 30th, 2018 1:43 pm
The rules around HST on services provided in Canada to non residents can be tricky. Generally though most services to non residents qualify for zero rated status. Meaning no HST.

Where no HST is applicable claim the full cost of the laptop including HST when calculating the CCA deduction.
Quick follow up, can I still claim HST credits for my monitor/laptop purchase if all my clients are foreign? I've been getting mixed signals with some saying i need at least one canadian client and others saying i don't need canadian client and i just need to create an HST account etc.
Sr. Member
Mar 3, 2018
516 posts
294 upvotes
GTA
Scavos wrote:
Aug 24th, 2018 11:09 am
Quick follow up, can I still claim HST credits for my monitor/laptop purchase if all my clients are foreign? I've been getting mixed signals with some saying i need at least one canadian client and others saying i don't need canadian client and i just need to create an HST account etc.
Yes you can claim input tax credits (HST you paid) on your zero rated services. You will have to register an account to do so.

From CRA website:

Zero-rated supplies are taxable supplies on which the tax rate is 0 percent. Persons involved in the production of zero-rated supplies can claim input tax credits on the supplies they use. This ensures that there is no GST/HST paid by the consumer. The following are zero-rated supplies.
Goods and services supplied or to be supplied to a purchaser outside of Canada.

Top

Thread Information

There is currently 1 user viewing this thread. (0 members and 1 guest)