Comment 116540

By CCA (anonymous) | Posted February 17, 2016 at 07:54:43 in reply to Comment 116539

CCA is determined by the government. It possibly could be seen as a subsidy but the differing treatment the CRA uses to assign to differing inputs is mostly based on the business nature of the input. Take computers for example. When they first came out the CCA was greater than 5 years I believe. The government saw them to be like typewriters which lasted 20 years. It was reduced largely because business found that they were replacing items in a shorter span than the then assigned CCA. CCA is supposed to reflect economic reality.

Since you are an accountant, you know that income is revenue - expenses (or inputs). To a person trying to maximize income for tax purposes, you want to reduce the inputs so spreading the expense out over time as opposed to allowing the expense in the year it is spent looks like a subsidy. But to the person who has to buy the input, it looks like a cost of doing business and nothing like a subsidy. This is not just semantics.

Now the government is considering negative interest rates so not spending your money is going to be seen as a subsidy and you will pay not to take an interest free loan. How you use the word depends on who you are. No person of business sees the CCA issue as about subsidization. They see it as about minimizing taxes. Subsidy implies that the government is entitled to your labour before you exercise your labour. It is a bad word.

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