Computer used for investing: tax write-off?
Friday, April 9th, 2010 at
10:00 am
Hello.
I’m considering purchasing a new computer and I will use it as a tool to help me buy stocks. It will be used for research, purchases/sales, and monitoring of positions. I’m located in Canada. If I’m not able to have it as a write-off on my personal income tax, would I be better off forming a holding company and using that method to make it a tax write off?
Thanks.
Tagged with: canada • forming a holding company • personal income tax • purchasing a new computer • stocks
Filed under: Used laptop for sale
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I would check with an accountant on that one to make sure…write offs are very touchy and one little mistake in how it’s documented can make it ineligible.
My understanding is that any money spent for the purposes/intent of a resonable expectation of making/earning money directly is a write off. Doesn’t matter if it’s full time or parttime (IE: IF you have a full time job and you own one rental property on the side, your expenses are still a write off for the rental property even though it’s not a full time job….also, I currently lease a laptop for my business and when I first started I was doing it more part time than anything and I was still able to write it off….also, if you borrow money to invest, the interest is tax deductible whether investing is your fulltime job or not…)
If you are buying it for investing though, you need to make sure that that is all that it is being used for if you are writting off the full amount…if there’s any personal use on there the deduction could be disallowed if you’re audited.
You can only write off (claim capital cost allowance) the computer over a number of years if you are in the BUSINESS of trading stocks, which means that you trade stocks daily or frequently of not too small quantity. If you have a full time job elsewhere, and invest in stock infrequently, you may not write off the computer.
Holding the stocks in a company may allow the company to claim capital cost allowance for the computer. However, the deduction does not flow to your personal tax return.