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[OP]
Deal Fanatic
Sep 23, 2007
5264 posts
1410 upvotes

Fees Prior to Incorporation

We haven't incorporated yet but there are some fees we have to pay prior to incorporation from each partner's pockets. These are costs of incorporation. They include:
-Consultation with lawyers
-Cost of translation
-Travel costs
-Other costs.

Questions:
1) My understanding is that the above costs are proper business expenses but please confirm.

2) For tax purposes pre-incorporation costs are considered ECE (Eligible Capital Expenditures) and can't be fully written off. So this means 75% of the costs are on 7% declining balance. 25% of the costs are not tax deductible at all?

3) What happens to the GST/HST we pay on the above expenses? Let say translation fee is $100 + $13 HST = $113, because it is incurred before we have registered for GST/HST #, can we still claim the GST/HST as ITC?

Thanks
3 replies
Jr. Member
Feb 18, 2010
130 posts
36 upvotes
MISSISSAUGA
1. Correct in the sense that they relate to business. Maybe not expense per se but ECE (intangible capital asset)
2. Correct. Not very attractive I know.
3. Not much you can do. You will claim $13 as business expense or as part of ECE.

- Allan
Jr. Member
Jul 14, 2008
102 posts
1 upvote
Toronto
Allan is knowledgeable CPA, and gives valuable advice, I read his posts.

Please note that I am not related to Allan or his practice, nor I am his client.

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