CCA (Capital Cost Allowance) on a computer in Canada Help

[gdguide]

Hi,

I'm trying to understand CCA, and what that means for my computer that I bought as a business expense. So basically, the CCA puts into place a depreciation scale of some kind. But what does that mean for me? Lets say I had a $1000 computer as an example. How much could I claim the first year? What happens on the second and third year? DO I end up getting all of my money back over time?

Can someone break it down for me? I know I probably sound like a total idiot.

Also, what happens if I sell this computer?

Thanks for any help on this.

Brian

[nelsona]

Not really a US/canada tax issue, eh? Consult your accountant.

[Mark T Serbinski CA CPA]

CCA is depreciation calculated on a declining balance basis. You use half of the rate for the class in the year of acquisition, and the full year on the remaining balance each year thereafter. You therefore never get to deduct all of the cost of your computer (Class 10, Normal rate 30%).

If you sell the asset you add the proceeds to the CCA class. If this is the only asset in the class, you may have to "recapture" CCA claimed to the extent that your sale price is over the undepreciated capital cost.

Claiming CCA is elective in Canada.

In the U.S., however, a new business asset may, under most circumstances, be written off entirely in the first year under Section 179, up to an annual aggregate limit for all assets acquired in the year. Otherwise the asset is depreciated.

Although claiming a Sec. 179 write off is elective, depreciation is NOT elective in the U.S.

If you are required to report the business activity in both Canada and the U.S., you must use the rules of each country on the respective returns.