Question

In the current year N purchased equipment to be used in its manufacturing and processing operations for $200,000 plus GST. N has been in the manufacturing business for a number of years and has annual sales in excess of 10,000,000. What is the maximum CCA deduction for the current year?

Answer 1

SOLUTION :

What is Capital Cost Allowance (CCA) ?

Capital cost allowance CCA is an annual detection in the Canadian income tax code that can be claimed on depreciable assets when figuring taxable income under the umbrella of the income tax act. Claim as a percentage of the assets cost for a number of years, the capital cost allowance is typically allowed for purchases that are expected to last for several years, such as buildings.

However the detection is not allowed in full for a single year; rather, the full cost is spread over a number of years on tax returns.

Capital cost allowance status is not granted for all business assets. Then is an important list of exclusions that must be considered when calculating whether a business is eligible for capital cost allowance. Some exclusions include land, property that is listed in the inventory of the taxpayer, property that was bought without the intent of producing income, at work but after November 12, 1981 and potentially property purchase golf course or camp that was brought after December 31st 1974. That detection it is also not allowed for spending on non durable items such as business supplies.

SPECIAL CONSIDERATIONS :

  A business needn't claim the maximum allowable amount of capital cost allowance in any given year, but main instead claim any amount from zero to the maximum. Any amount less than the maximum will be carried over to the next year and will be available to claim The is the useful tax detection tool to use.

Thus, for a manufacturing or processing equipment acquired after 2015 and before 2026 as in the case of Mr N the maximum amount of CCA detection for the current year is 100%.

So Mr. N and can claim a maximum of 100% deduction under class 53 of the act.

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