I am self employed. I bought an air conditioner for my office. How to I expense it. Less than $500

[Zack1103]

You may be able to deduct the cost of the air conditioner as a business expense on your income tax return. If the cost of the air conditioner is less than $500, you can deduct the full amount in the year that it was purchased using the "Capital Cost Allowance" (CCA) for small business assets.

Here are the steps to expense the air conditioner:

1. Keep a record of the purchase: You should keep a record of the air conditioner purchase, including the date of purchase, the vendor, the amount paid, and any other relevant information.

2. Determine the class of asset: The air conditioner would be classified as a "Class 8" asset, which has a CCA rate of 20% in Canada.

3. Claim the CCA deduction: You can claim a CCA deduction of 20% of the cost of the air conditioner on your income tax return for the year in which it was purchased. For example, if you purchased the air conditioner for $400, you can claim a CCA deduction of $80 ($400 x 20%).

For more information please see Canada Revenue Agency Website below. 

Please see Class 8  Classes of depreciable property

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[Sophie86]

I had the same question as the original poster. If the air conditioner is >$500 and included in Class 8, is it correct that it may still be eligible for 100% deduction if it is designated as immediate expensing property (DIEP)? The automatic calculation done by Turbotax seems to indicate this.

[Zack1103]

If the air conditioner cost you more than $500, it would generally be considered a capital expense, and you would need to claim the expense over a period of several years through the capital cost allowance (CCA) deduction.

The CCA is a tax deduction that allows you to recover the cost of certain capital assets, including the air conditioner, over a period of time. The CRA has established different classes of property, and the CCA rate varies for each class. For example, as a Class 8 asset, the CCA rate for an air conditioner would be 20% per year on a declining balance basis.

For more information please see our TurboTax Website.  What is Capital Cost Allowance (CCA)?

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