Where do I deduct expenses for monthly subscription service based software that I use to do my job?

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Hello,

If you run a business or work as a self-employed contractor, you can write off most of the expenses you incur in order to run your business, including computer software and Web development. However, you may not always be able to write off the entire expense for the year that you incur it. The key is understanding the subtle difference between current and capital expenses.

Computer Software and Website Development Costs

• If you need software or website development for your business, you may write off the costs of those items as business expenses.
  • In order to claim the expense as a business expense, you must use the software or website for work.
• You may write off both the cost of the product as well as any amounts you pay to contractors for technical help or installation.

In some cases, you may be able to change the status of certain software or property from personal use to business use, and thus may be able to write off a portion of the item’s value.

Classes of Depreciable Property

Systems software for computer hardware or data-processing equipment falls into class 10with a capital cost allowance rate of 30 percent. This means that if you spent $600 on software in this category, you may write off $180 for the year of purchase. If you dispose of the software before claiming all of its capital cost, you may write off a portion of the unclaimed CCA.

If you purchase software that falls into almost any category besides systems software, the CRA considers it to be a capital cost, but allows you to deduct 100 percent as the software falls into class 12.

 

Please visit TurboTax blog for more information.

 

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