My wife is an interior designer and purchased a new laptop for work. She was working for a company that paid her with a T4a (fees for services), but now works for a new company that has her on payroll and will receive a T4 from. Is she still eligible to claim the CCA amount of the laptop? I'm not sure if i should just check off that it's not the final year in case she does freelance work. Not sure what would happen with the UCC if she doesn't declare any income the next year though.
Any advice would be appreciated.
Thank you!
If it's a company's final year of business, you don’t really claim CCA. Instead, you would need to close all the CCA classes by “disposing” of all the assets. Anything you didn't sell would be considered a "deemed disposition" at the asset's fair market value. For many items this means this would result in a "terminal loss", which would be a deduction to the business income. But in some cases you may get a “recapture”, which would be added to the business income instead.
In your wife’s case, if she’s no longer going to continue with her self-employment, then you might not want to use CCA, especially if she’s used her laptop for personal reasons or for other work. The CRA may give you problems if you try to claim a lot of deductions for a business that lasted for only a short period of time.
Hey Susan, thanks again for your reply! This is the only expense that she would be deducting. She needed to purchase it for work because the previous laptop was no longer powerful enough to properly run the required software for her business. However she does also use it for personal reasons as well now.
I don't want to risk causing problems for her so i'm leaning towards just not claiming it. I was just curious if I were to check that it was not her final year in business (In case she finds freelance jobs), what would happen to the UCC amount if she did not end up finding any jobs and has not self employment income to declare?
Thank again for all your help!