As a software vendor I purchased a 3-year annual support license for a client ($27,000).- my expense. I invoiced the client $36,000. I show the $36,000 as revenue. Where do I enter my expense of $27,000?
Mark
Thank you for reaching out.
You have rightly categorized $36,000 as part of income/revenue.
For $27,000 amount you will have to use form T2125, Statement of Business or Professional Activities, to calculate capital cost allowance (CCA) on your depreciable properties. To determine which class your software belongs please go through this list - http://www.cra-arc.gc.ca/tx/bsnss/tpcs/slprtnr/rprtng/cptl/dprcbl-eng.html
Hope it helps!!!
The answer to my question does not seem appropriate. I paid a vendor $27,000 (Expense) for a three year annual support license for a client. I invoiced the client $36,000 (Revenue). There is no capital involved. Where do I enter the expense for the transaction?
Thank you for reaching out.
You have rightly categorized $36,000 as part of income/revenue.
For $27,000 amount you will have to use form T2125, Statement of Business or Professional Activities, to calculate capital cost allowance (CCA) on your depreciable properties. To determine which class your software belongs please go through this list - http://www.cra-arc.gc.ca/tx/bsnss/tpcs/slprtnr/rprtng/cptl/dprcbl-eng.html
Hope it helps!!!