# Equipment write off, sole proprietorship



## JohnNayduk (Jun 15, 2015)

In late 2013 I started a 3D printing business that I am getting off the ground but I also work outside the business. Our accountant suggested that I run it as a sole proprietorship to take advantage of the tax laws that allow me write off business loses against another form of income. We bought a few printers in 2014 which would depreciate. In 2013 we were able to deduct a certain amount for a printer that we bought but this year I'm told that I cannot write off any equipment against the other income. We could for 2013 but not for 2014. Has anything changed?

Cheers
John
NK 3D Printing


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## Russ (Mar 15, 2010)

I can't see why you can't offset a business loss against other income in 2014. You can't write off equipment costs directly against other income, but equipment depreciation (CCA) can be written off against business income and if there is a business loss then the loss can reduce taxes payable. Did the business have a profit or a loss in 2014?


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## agent99 (Sep 11, 2013)

The CCA for computer equipment is 55%. Perhaps it is already fully depreciated? Ask the accountant.


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## JohnNayduk (Jun 15, 2015)

We had a loss in 2014. It took a while to get to the point where we can produce prefect 3D prints consistently, we're at that point now, half way through 2015. I was very surprised when the accountant told me that we could not write off the depreciation for the equipment this year (for 2014) even though they did for 2013. I'm thinking that I need to see another accountant.

Cheers,
John
NK 3D Printing


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## Russ (Mar 15, 2010)

I presume you understand the concept, but just for clarification, you can't write off depreciation (capital cost allowance) against other income. CCA may be claimed by the business with the effect of reducing business income or increasing business losses. If the business has a loss (with or without CCA), that loss can reduce total income from all sources. Also note that CCA does not have to be taken each year. There may be strategic reasons to elect not to claim CCA so that it can be claimed later at a more advantageous time.

Also, I don't think the equipment would be fully depreciated yet. I believe the half year rule would apply, and the % is applied annually on the declining balance, not the original cost.


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## agent99 (Sep 11, 2013)

Russ said:


> Also, I don't think the equipment would be fully depreciated yet. I believe the half year rule would apply, and the % is applied annually on the declining balance, not the original cost.


That is likely true. 

I was thinking about CCA class 52 which only applies to equipment acquired between Jan. 27, 2009 and Feb. 1, 2011 and has a 100 percent capital cost allowance (CCA) rate and could be deducted in year of purchase.

Mind you, if printer cost under $500 (unlikely) and could be considered a "tool" it may qualify still for a 100% CCA in year of purchase. (The “half-year” rule doesn’t apply to the acquisition of certain capital property, such as tools costing less than $500. I believe such assets can be written off 100% in the year of purchase (Class 12 100%))


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## JohnNayduk (Jun 15, 2015)

OK Russ, let's see if I understand it. I cannot write off CCA pre say but it can increase the business loss and that can reduce the amount of tax I pay from another source of income. Am I close with this?

Cheers,
John
NK 3D Printing


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## JohnNayduk (Jun 15, 2015)

Also, we spent $22,159.35 on equipment and nothing ended up on line 9936 (total capital cost allowance) on the tax form. Like I mentioned, for 2013 it was claimed but not for 2014.


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## Charlie (May 20, 2011)

You need to talk it over with your accountant. We're just guessing at info here.

Possibly it was fully written off somehow in 2013 and there's nothing left to write off?

Or maybe your accountant feels a 2014 writeoff would make the loss too big given revenue and prospects. (I wouldn't agree with this if its just a 2yo business)

Or he/she wants to save it for a later year because your other income is lower and the deduction would not be worth much.

If there's a value left in the class, and the business is genuinely operating (even with little or no revenue) then you should be able to deduct the CCA. But we're guessing blind here without knowing the rational or the other considerations.


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## Russ (Mar 15, 2010)

JohnNayduk said:


> OK Russ, let's see if I understand it. I cannot write off CCA pre say but it can increase the business loss and that can reduce the amount of tax I pay from another source of income. Am I close with this?


Yes, that's my understanding.


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## Russ (Mar 15, 2010)

JohnNayduk said:


> Also, we spent $22,159.35 on equipment and nothing ended up on line 9936 (total capital cost allowance) on the tax form. Like I mentioned, for 2013 it was claimed but not for 2014.


That is the correct line number. I would love to know the reason for no CCA claim in 2014. Can you find that out?


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