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New Member

Applying CCA to 'other' income

I have a solar microfit business that generates a modest income but has a large capital cost allowance I can apply.  I also earn regular income as an employee of another company.

TTax is suggesting I apply the maximum amount of CCA allowed to the solar and apply the loss to my other income to generate a return.

Is this permitable?

 

1 Best answer

Accepted Solutions
New Member

Applying CCA to 'other' income

Yes it is.  Although, you may wish to adjust the CCA claim to a lesser amount & play with it a bit to see what your refund or tax payable would be with various CCA amounts.  You can also adjust it to -0-.  You have to look at your situation.  If you do not need CCA to lower tax "payable" it can be beneficial to carry it over to future year; especially, if you think you could be disposing of an asset next year or two.  It would be beneficial because for example.  Let's say you have one piece of equipment (asset) in a class whose UCC at beginning of year is $13,000 and CCA claimed this year is $3000, resulting in UCC at end of year for that class at $10,000.  Next year you sell that equipment for $12,000.  Then you would have a profit (recapture of CCA) on the sale of the equipment at $2000.  This would add to your income and become taxable.  So sometimes it may be better to adjust the CCA amount to a lesser amount or zero, depending on possible future plans.  Hope this helps.  Also, here is a link to the business & professional income guide which has great info on CCA and many other items.

http://www.cra-arc.gc.ca/E/pub/tg/t4002/t4002-e.html#P1174_102497

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5 Replies
New Member

Applying CCA to 'other' income

do I have to have a registered business to claim CCA?
New Member

Applying CCA to 'other' income

Yes it is.  Although, you may wish to adjust the CCA claim to a lesser amount & play with it a bit to see what your refund or tax payable would be with various CCA amounts.  You can also adjust it to -0-.  You have to look at your situation.  If you do not need CCA to lower tax "payable" it can be beneficial to carry it over to future year; especially, if you think you could be disposing of an asset next year or two.  It would be beneficial because for example.  Let's say you have one piece of equipment (asset) in a class whose UCC at beginning of year is $13,000 and CCA claimed this year is $3000, resulting in UCC at end of year for that class at $10,000.  Next year you sell that equipment for $12,000.  Then you would have a profit (recapture of CCA) on the sale of the equipment at $2000.  This would add to your income and become taxable.  So sometimes it may be better to adjust the CCA amount to a lesser amount or zero, depending on possible future plans.  Hope this helps.  Also, here is a link to the business & professional income guide which has great info on CCA and many other items.

http://www.cra-arc.gc.ca/E/pub/tg/t4002/t4002-e.html#P1174_102497

View solution in original post

New Member

Applying CCA to 'other' income

You cannot use losses from a MicroFIT system to create a refund or show a loss, I did not know this. Turbo Tax let me last year and now I am being audited by the CRA and owe $4500 and my husband owes $1700. There is language apparently that does not allow this. Do not let Turbo Tax allow you to get a refund this way. An audit risk is there.
New Member

Applying CCA to 'other' income

If the legislation does not allow for CCA to further a loss, links to guidelines published by the CRA should be referenced/provided.  Likewise, if this is the case, the underlying formulae within the Turbo Tax software should not allow such expenditures to be entered.  Turbo Tax needs to rectify this situation as many of us rely on the software to create accurate / legal filings.
New Member

Applying CCA to 'other' income

TTax software calculations are incorrect as of 2019-04-19 allowing too much CCA on class 43.2 for solar panels. Get on this TurboTax.