This is another view-from-my-office photo.
Right now, most Canadian photographers will be doing their annual income tax. Some business expenses are not deducted in full but instead they are depreciated over time. Capital Cost Allowance (CCA) is used to depreciate the value of photo equipment, computers, and other business purchases that have continuing value.
There are currently two special – and temporary – additions to CCA that photographers should be using.
Important: remember that I’m not an accountant or a tax expert. You need to check with your own accountant. Don’t believe anything you read on the Internet ;-)
Lower Your Taxable Income
The first addition to CCA is the Accelerated Investment Incentive. This came into effect in 2018 and it expires December 31, 2027.
The second is Immediate Expensing which came into effect mid-2022. Immediate expensing is a temporary measure introduced to help spur business investment after the pandemic. It expires at the end of 2024.
Normally a business depreciates capital costs at a rate prescribed by the CCA. But with immediate expensing, a business can deduct 100% of the cost of eligible property in the year of purchase. For photographers, “eligible property” includes most of what a photography business buys: cameras, lenses, studio equipment, computer equipment, and even a vehicle. (There are additional things to consider before you immediately expense a vehicle.)
The small catch is that immediate expensing can be used only in the year the property became “available for use.” It’s a use-it-or-lose-it deal. If you don’t use immediate expensing for a particular item in a given year, you can still use the normal CCA which can be carried forward and used another year.
Immediate expensing is optional like all other CCA. You don’t have to use it if you don’t need the deduction.
You can’t use immediate expensing to create a business loss. But it can be used to lower your taxable income to zero. If you have other deductions that can’t be carried forward, you most likely will want to use those deductions first to lower your taxable income to zero. So you may not need to use immediate expensing.
Immediate expensing for individuals will be available for property purchased and available for use before January 1, 2025. So if you’re planning a large capital purchase (e.g. camera, lenses, etc.), consider doing it this year (2024) rather than next year.
Please check the date of this article because it contains information that may become out of date. Tax regulations, sales tax rules, copyright laws, privacy laws and other regulations and policies can change from time to time. Always check with proper government or regulatory sources for up-to-date information.
