Rules of Depreciation of Property

Canada Revenue has many different rules and laws in place when it comes to filing your taxes. Many of which do not affect a business but some do. And one of the items that can have a huge difference on your taxes deals with deprecating your property. The rules for this vary in terms of rates of depreciation of your property but essentially it comes down to writing down larger ticket items. Currently the rules are that any one single item valued at $500 or more before taxes is considered an asset and not an expense thus must be depreciated over time .

So often items that become depreciable are things like vehicles, heavy equipment, expenses pieces of work equipment, buildings etc. Each major type of asset has its own rates of depreciation as well such as equipment is 20%, vehicles are 30%, computers are 55% etc etc. So the main other point with Depreciation is you are only allowed half of your usual rate of depreciation in the year you acquire an asset. So in essence if for instance you purchase a major piece of equipment in 2019 for $10,000 the normal rate of depreciation for it would be 20% or $2000 worth of depreciation , but in your first year  the maximum you can deduct would be half of that which would be equal to $1000.  Then after year one the normal rate of depreciation kicks in. There are other rules involving depreciation that come into effect as well but these are some of the most basic rules that come into play for most businesses that affect their level of income at the year end.