Can I begin capital cost deductions for equipment acquired in a previous tax year in this year? If so, can the deduction calculations be based on the original price?

[tylerkrygerwilso]

e.g. - I purchased a piece of equipment in 2019 and it has not yet been claimed through CCA. Can I begin deductions this year and use the original equipment value to calculate deductions?

[Lvsingh_2692]

You may claim your cca deduction which will reduce your Net income for tax purposes. For calculating your cca, the first step is to know your opening UCC which is the balance of capital cost of all the equipment in that class. As per CRA, the original capital cost is the purchase price + the part of your legal, accounting, engineering, installation, and other fees that relate to buying + cost of any additions or improvements you made. The cca deduction is calculated as rate x base. In this case, your equipment would fall under class 8 which has a CCA rate of 20%.

While the Base is calculated as:

Opening UCC (If you don't have any equipment in this class before, the opening UCC is 0)

+ Net additions (Additions - Disposal) 

+ Accelerated investment incentive (50% of the net additions when it is positive)

After you get the base, multiply it to 20% to know the cca deduction for the year. Ending Ucc  (calculated as Base - cca deduction - Accelerated Investment Incentive reversal) will be the opening bcc for the next tax year.

Here is a link wherein you can find the assigned cca rates by CRA on each class. 

If you require further assistance please contact our phone support team for further assistance or contact us directly on Facebook or Twitter.

[Lvsingh_2692]

If you require further assistance please contact our phone support team for further assistance or contact us directly on Facebook or Twitter.