Adding capital equipment to past tax returns
By John R Mott | January 22, 2012
I forgot to add some business equipment to my 2010 return. How do I go about submitting these items? Items in question are: Canon 60D camera, camera lens, and camera flash.
John R Mott answered:
These are in the nature of capital expenditures which in essence means that they cannot be fully expensed in one year, but instead must be depreciated over time. A capital expenditure is something that typically has a long useful life.These particular expenditures fall into Class 8 depreciable property, which is a very broad category that is subject to a depreciation rate of 20 per cent declining balance. The rate in the first year is one half of the regular rate (i.e. 10 per cent). For example, the maximum depreciation expense (called capital cost allowance) available on a $1,000 purchase would be as follows:Year 1 - $100 [$1,000 x 20% x 1/2]
Year 2 - $180 [$900 x 20%]
Year 3 - $144 [$720 x 20%]
and so on....
Capital cost allowance is a discretionary expense. In other words, you can claim less than the allowed maximum rate, including nothing. For this reason, and also because amending a tax return can be a troublesome exercise, I recommend that you not attempt to change your 2010 tax return. I recommend that you simply add your 2010 camera expenditures to the opening balance of Class 8 equipment on your 2011 tax return.