Many Canadian freelancers wonder whether they can deduct the equipment and startup costs they paid when launching their business. The short answer is: some costs are fully deductible in the year you pay them, while others must be depreciated over multiple years depending on what the asset is and how much it costs. Capital assets like computers, furniture, and machinery are generally subject to capital cost allowance (CCA) rules, meaning you claim depreciation annually rather than the full cost upfront. Smaller items under certain thresholds and certain startup expenses may qualify for immediate deduction. Not all equipment and startup spending is treated the same way by the Canada Revenue Agency (CRA). The key distinction is between capital assets and current business expenses. Capital assets include: - Computers, laptops, and tablets - Office furniture and shelving - Photography equipment or production gear - Vehicles used for business - Software licences (depending on terms) - Website domain registrations and hosting (in certain cases) These items are depreciable. You cannot deduct their full cost in the year of purchase. Instead, you claim a percentage of their cost each year as depreciation through the CCA system.
No, a laptop is a capital asset and must be depreciated through CCA over multiple years. You can claim 55% of the cost in the first year (on a declining balance basis), and continue claiming depreciation in future years on the remaining balance.
Capital assets (like computers and furniture) are depreciable and must be claimed over multiple years through CCA. Business expenses (like office supplies and software subscriptions) are fully deductible in the year you pay them.
No, you can claim any amount up to the maximum CCA allowable, or claim nothing in a given year. Unused CCA can be carried forward to future years, which gives you flexibility to manage your income and tax liability.
Generally, you can only claim CCA on capital assets once your business is actively operating and generating income. Document when your business officially launched to support the timing of your deductions.
No, you can only deduct the business-use percentage. If your equipment is 60% business and 40% personal, you deduct only 60% of its cost. Keep usage records to support this allocation.