CACC522-Week04-text

CACC522-Week04-text - CACC521Week04 Quiztakeup 9.nobenefit

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CACC521-Week04 20:23 Quiz takeup 9. no benefit 10. business income since purchased for resale Chapter 6 CCA – Capital cost allowance Differs from accounting Affects all sources of income except maybe other income Accounting Amortization reflects useful life of asset Tax – arbitrary  Classes –  CCA concerns timing of deduction 2 categories tangible depreciable assets follow declining balance method
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intangible goodwill patents licenses incorporation costs ECP – Eligible capital property or expenditure Assets that can be depreciated Available for use o if not installed, cannot claim CCA Must own the asset o rental assets cannot have deductions o Capital Lease add back amortization add back interest deduction deduct lease payment o Leasehold improvements can be deducted over the life of the lease For the purpose of earning income o property used personally – no o property used for rental – yes Rates Classes o don’t have to claim maximum amount allowed o discretionary deduction in Canada. USA is different o can claim $0 if you want, then make percentage deduction the next year not accumulative o Declining balance method Class rate is an annual rate applied to a balance on a  particular year balance is reduced by CCA claim each year. Open UCC 10000 Year 1 CCA 30% -3000 7000 Year 2 CCA  -2100 4900 Sell asset -3000 Positive balance in  class when no  assets remaining terminal loss 1900
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o ½ year rule – can only claim ½ of the CCA in first year of ownership o doesn’t apply to Class 14 and some items in Class 12 o net additions in the year – additions in year – asset disposals = ½ year CCA If short taxation year – can only claim prorated amount of CCA o Changing fiscal year – maybe first year of business incorporation or amalgamation or  windup before year end For test – must know which asset goes into which class
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CACC522-Week04-text - CACC521Week04 Quiztakeup 9.nobenefit

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