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I (as my corporation) bought a high-end unlocked smartphone (not under any carrier contract). My question is how this should be reported under Canadian tax rules. Must it be treated as an asset to be depreciated, or can it be treated as an office expense? I am assuming the monthly carrier charges are OK as telephone expenses.

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Explained in T4002. http://www.cra-arc.gc.ca/E/pub/tg/t4002/t4002-e.html

If you buy a computer, cellular telephone, fax machine, or other such equipment, you cannot deduct the cost. You can deduct CCA and interest you paid on money you borrowed to buy this equipment that reasonably relates to earning your business income. For more information on CCA, see Chapter 4.

It sounds like a class 8 for CCA if you follow the links.

Class 8 with a CCA rate of 20% includes certain property that is not included in another class. Examples are furniture, appliances, and a tool costing $500 or more, some fixtures, machinery, outdoor advertising signs, refrigeration equipment, and other equipment you use in business.

Photocopiers and electronic communications equipment, such as fax machines and electronic telephone equipment are also included in Class 8.

  • +1. But, is a smartphone first a computer, or a telephone? If computer hardware, wouldn't the CCA rate be much more advantageous? For the "telephone equipment", 20% implies a lifetime of 5+ years... unlikely for most people who use smartphones. Computer life time is more apropos, no? – Chris W. Rea Nov 20 '16 at 20:38
  • i.e. class 50 @ 55%? – Chris W. Rea Nov 20 '16 at 20:56
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    @ChrisW.Rea You're probably right, I just searched the page for phone, however there is a concept of terminal loss if you junk something. Also, I noticed the op said corporation, the same concept applies but on form T2 Sched 8. – brian Nov 20 '16 at 21:27
  • Because it will rapidly become obsolete and probably even unsaleable, it hardly seems like a business asset. That's why I'd rather not spread the expense via CCA over who-knows-how-many years and take the full cost in the year purchased. – Anthony X Nov 21 '16 at 0:04
  • @AnthonyX Class 50 is probably as good as it gets. Taking a full deduction in the year of purchase wouldn't be reasonable. As far as I'm aware, you can't do a full deduction for computer hardware worth more than $200 -- CCA applies instead, at the prescribed schedule. – Chris W. Rea Nov 21 '16 at 0:40

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