Entrepreneurship & Small Business

Can I expense all my T2125 inventory as I depart Canada?

  • Last Updated:
  • Mar 1st, 2020 4:27 pm
Jul 8, 2017
219 posts

Can I expense all my T2125 inventory as I depart Canada?

Jan 20th I departed Canada and severed ties and became a US resident.

My taxable Canadian self-employed sole-prop income was about $25k Jan 1st-20th, 2020. My "closing" inventory on Jan 20th for my T2125 is about $10k, ie inventory I did not sell.

Can I expense this remaining $10k inventory when I file my Canadian partial return for Jan 1st-20th , 2020? Or do I not get to do this?

Note: My business continues but now domiciled in the US and I am no longer subject to Canadian income tax starting Jan 21st 2020.
1 reply
Deal Expert
User avatar
Aug 2, 2010
15196 posts
Here 'n There
I believe you would have to have destroyed it, sold it at a loss or somehow proved there was a permanent impairment of the inventory such that it was worthless. It does not seem like you are in that situation. Furthermore, you are still operating the business and it is irrelevant that you are a sole proprietor.

Lastly, you can be domiciled in the US but that alone does not mean you are not subject to Canadian income tax. You have to have cut all financial ties to Canada. Perhaps that's what you mean, but that's not what you actually said.

You are best seeking guidance from an accountant.