If You Are Thinking About Buying New Technology—Do It Before Jan. 1st 2020
Wed Nov 20, 2019 | DIGITEX
Most finance and IT teams sit down before the end of each calendar year to build a budget for new technology purchases for the upcoming year. Sometimes we overlook the everyday technology like laptops, desktops, and printers but they often represent a significant piece of your budget.
These assets typically stay on your books for 3-5 years, depending on their useful life, but in addition to increasing the productivity of employees, you can also save money… on your tax bill!
You can write off your purchase(s) as a depreciation, meaning you can avoid the oh-so-dreaded “Tax Man” and will be exempt from having to pay taxes on it. As a business—nothing sounds more like music to your ears than “depreciated assets,” am I right?
Think about this: If you purchase $10,000 worth of equipment in December, you can claim double that amount in the FIRST year. BDO Canada writes “For businesses that are profitable, a faster write-off of expenditures for tax purposes means that there will be lower taxable income, and therefore a deferral of tax, in the year of acquisition of the capital asset.” (BDO Canada, Feb. 2019). And if that isn’t great news, we don’t know what is!
Bottom line: if you know you need to make an investment and replace your equipment/technology within the next year, it’s better to do it in December than in January. If you’re going to have to make the investment regardless, you might as well get a full year’s benefit of tax depreciation.
Writing off a purchase as depreciation = avoid the Tax Man = a WIN for you and an excellent start to the year 2020.
Interested in taking advantage of this tax break? Contact a Digitex Specialist today.
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