Canuckbusiness

Start a business, Do your taxes, Save money

What class does CRA want software and computers entered into?

How do I enter software and computers on my tax return in Canada?

Computers bought in February 2011 or later belong in Class 50. This class allows a 55% deduction each year. Operating software (such as Windows, etc.) is also included in this class. So if you buy a computer and pay extra for an operating system, just lump them together and put them in Class 50 together.

Software (that is not an operating system) belongs to Class 12, which is a 100% write-off. But not exactly. It is subject to the “half-year” rule which means you only get to write off half in the year that the asset is purchased. Just put it in Class 12 in TurboTax and let the software figure it out for you.

Speaking of TurboTax, does that go in Class 12?

Not in my little piece of the universe. It is only worth about $40 so don’t bother capitalizing it. Put it in Office Expenses and put it out of its misery. Doing so gives you a 100% deduction right now with none of that half-year stuff to worry about. See my post on Expenses vs. Capital Assets for more.

April 5, 2012 - Posted by | Home office expenses, Running Your Business, tax | , , , , , , , ,

7 Comments »

  1. Hi James,

    I have a question about this. I bought a new computer on Boxing Day 2012, however the invoice was dispatched in January 2013. Is it possible to claim the computer in 2012?

    Thanks in advance!

    Comment by Ray | April 16, 2013 | Reply

    • Hi Ray,

      When did you actually pay for it? If you paid for it in 2012 you can claim it in 2012.

      Comment by -- | April 16, 2013 | Reply

      • I paid for it in 2012.

        Thanks for the advice, James!

        Comment by Ray | April 20, 2013

  2. Hi there, is class 50 subject to the half-year rule as well? Thank you

    Comment by Phantasmix | April 29, 2013 | Reply

    • Yep, unfortunately!

      Comment by -- | April 29, 2013 | Reply

  3. Are you positive about TurboTax? I’m almost positive when I purchased it that both it and the CRA website said that software for doing taxes isn’t deductible.

    Comment by pete smith | May 19, 2013 | Reply

    • Hi Pete,

      Technically, you are not allowed to deduct accounting fees or tax preparation software for doing your taxes UNLESS one of these applies to you:

      1. You have a business and the cost relates to the preparation of your T-2125

      2. You have investment income and the cost relates to the calculation of your taxes payable on your investment income.

      I make sure I always have at least one of these! And by the way, interest income on a T5 counts as investment income in my books. YMMV.

      Comment by jkswift | May 19, 2013 | Reply


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