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Canadian corp pre tax profit and taxation question

Bexiesbruv

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Oct 24, 2013
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Stephen Beckwith
My tax liability last year was too high.
I just spoke with a local CC'er and he had the same issue last year and told me that, rather than paying out tax, he bought another TM. I am pretty sure he is a sole proprietor.
My questions
1. How does this work for new equipment?
Say his tax liability was 22k but he bought a TM for 22k before his year end. I am pretty sure he cannot offset the whole TM cost but what proportion can he offset? Is it a deduction or is he just able to amortise or depreciate the TM over 5 years at 20% (for example) per year? So making the offset/deduction $4400 for any one year? So the tax liability would come down to 21.6K
2. As a corporation do the same rules apply?
 

Omar

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May 24, 2014
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I woukd ask an accountant. Maybe he can give you some other tips too.
 

astrikingimage

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Oct 20, 2010
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Jose Salazar
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Here in the us of a. , you would be able to 1. Write off all 22k so his profit would be 22k less. 2. He could depreciate the tm over 7 years and reduce the profit he shows for the next 7 years.
Disclaimer.. I am not an accountant but I did play one one TV. Talk or read the irs guidelines.
 

Bexiesbruv

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Oct 24, 2013
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Here in the us of a. , you would be able to 1. Write off all 22k so his profit would be 22k less. 2. He could depreciate the tm over 7 years and reduce the profit he shows for the next 7 years.
Disclaimer.. I am not an accountant but I did play one one TV. Talk or read the irs guidelines.
Pretty sure here you are only able to amortise the value with an outright purchase. Its the reason many folks (myself included) go with a lease purchase (not in this case but previously) because you can offset the lease cost against profit AND amortise the value.