privatebydesign said:
IglooEater said:
privatebydesign said:
If I lease that $700 lens/software/capital expense then my monthly payment is 100% deductible that year, I don't have to find the $700 and I don't have to effectively loan myself anything.
Can you seriously not deduct a $700 purchase? I don't have to amortize anything below $1,000 here. I guess our tax laws in Quebec are pretty reasonable after all...
No. If it is a capital purchase, even if it is a $1, it takes between three and ten years depending on it's classification to amortize.
Even so, I'm having trouble wrapping my head around spending MORE money to get a deductible sooner being better for the business. Deducting something reduces your effective reported income by the amount, but the money it saves in the end is only the taxes on the amount, its not equivalent to the amount itself.
A business that actually saves money on this must have an unbelievably high tax rate, or is running on ridiculously thin margins to make having more money now and less over long run somehow worth it.
I think big businesses like it because it spreads the cost evenly over time. (Who care what the business looks like in five years these days. We've got to have a great report to the stock holders this quarter!)
The slight increase in cost is chump change to a large business, and the evening of expenses over time is priceless. I'm sure they're happy to pay a bit more for it.