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Old 12-09-2021, 11:15 AM
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Default writing off purchase of a trapline

Looking for advise on the posibility of writing off all or part of the purchase of a trapline.Thanks
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Old 12-09-2021, 11:46 AM
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I would say seek the advice of a good accountant but you are probably eligible to write it off as a class 14.1 asset, 5% per year on a declining balance basis.
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Old 12-09-2021, 11:10 PM
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The proverbial can of worms. The tax man commeth
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Old 12-10-2021, 07:11 AM
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Quote:
Originally Posted by kevpack View Post
I would say seek the advice of a good accountant but you are probably eligible to write it off as a class 14.1 asset, 5% per year on a declining balance basis.
Great advice ..

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Old 12-10-2021, 08:16 AM
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Question, how would one justify it as declining asset unless you take into consideration the logging damage to a line each year.
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Old 12-10-2021, 08:53 AM
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Reality and tax laws are not the same, I doubt if it declines in value but you take any legal write off you can, yeah?
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Old 12-10-2021, 09:37 AM
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Quote:
Originally Posted by kevpack View Post
Reality and tax laws are not the same, I doubt if it declines in value but you take any legal write off you can, yeah?
You cannot write off for tax without a sale. You can claim cca and you should maximize the value of the tangible assets when purchased ie equipment and vehicles. I own a cpa firm in Alberta and happy to assist outdoor and ranching and farming clients.
SS
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Old 12-10-2021, 11:29 AM
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Originally Posted by WhiskeyJack View Post
You cannot write off for tax without a sale. You can claim cca and you should maximize the value of the tangible assets when purchased ie equipment and vehicles. I own a cpa firm in Alberta and happy to assist outdoor and ranching and farming clients.
SS
So capital cost allowance isn't writing amounts off against income? Wow, I've been doing it wrong since 1975. Intangibles, class 14.1, 5% per year, no?
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Old 12-10-2021, 12:14 PM
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From what I've heard, short term gain for long term pain. I wouldn't invite the tax dept. in.
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Old 12-10-2021, 12:49 PM
sourdough doug sourdough doug is offline
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From what I've heard, short term gain for long term pain. I wouldn't invite the tax dept. in.
As mentioned in #3...but then again, would it be any worse than what we have now with the biologists (PETA) at the reins of OUR wagon...
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Old 12-10-2021, 01:06 PM
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Default Conspiracy CRA LOL

I think that with the assistance of professionals like Whiskeyjack the OP can rest assured that he/she won't be incurring the wrath of CRA just by claiming deductions that are legally allowed.
What was your name again, lol
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Old 12-10-2021, 06:03 PM
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Quote:
Originally Posted by kevpack View Post
I think that with the assistance of professionals like Whiskeyjack the OP can rest assured that he/she won't be incurring the wrath of CRA just by claiming deductions that are legally allowed.
What was your name again, lol
14.1 has not be around since 1975 lol. I prefer class 10 and 30% but I guess you know best.
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Old 12-11-2021, 08:59 AM
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Quote:
Originally Posted by WhiskeyJack View Post
14.1 has not be around since 1975 lol. I prefer class 10 and 30% but I guess you know best.
Class 14.1 (5%)

Starting January 1, 2017, include in Class 14.1 property that:

is goodwill
was eligible capital property (ECP) immediately before January 1, 2017, and is owned at the beginning of that day
is acquired after 2016, other than:
property that is tangible or corporeal property
property that is not acquired for the purpose of gaining or producing income from business
property in respect of which any amount is deductible (otherwise than as a result of being included in Class 14.1) in computing the income from the business
an interest in a trust
an interest in a partnership
a share, bond, debenture, mortgage, hypothecary claim, note, bill or other similar property
property that is an interest in, or for civil law a right in, or a right to acquire, a property described in any of the above sub-bullets

Examples for farming are milk and egg quotas.

I think the purchase of a trapline is at least partially the purchase of a right or a license as defined in the Tax Act, not a tangible property.

Sorry to highjack the post OP
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Old 12-11-2021, 02:29 PM
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Quote:
Originally Posted by kevpack View Post
Class 14.1 (5%)

Starting January 1, 2017, include in Class 14.1 property that:

is goodwill
was eligible capital property (ECP) immediately before January 1, 2017, and is owned at the beginning of that day
is acquired after 2016, other than:
property that is tangible or corporeal property
property that is not acquired for the purpose of gaining or producing income from business
property in respect of which any amount is deductible (otherwise than as a result of being included in Class 14.1) in computing the income from the business
an interest in a trust
an interest in a partnership
a share, bond, debenture, mortgage, hypothecary claim, note, bill or other similar property
property that is an interest in, or for civil law a right in, or a right to acquire, a property described in any of the above sub-bullets

Examples for farming are milk and egg quotas.

I think the purchase of a trapline is at least partially the purchase of a right or a license as defined in the Tax Act, not a tangible property.

Sorry to highjack the post OP
All good it's all constructive conversation!
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Old 12-12-2021, 09:15 AM
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I'm sure it's legal, but is it worth the future headache? I know a fellow in the Greater Edmonton local that sold his line and experienced many unforeseen headaches.
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Old 12-12-2021, 03:59 PM
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Quote:
Originally Posted by WhiskeyJack View Post
14.1 has not be around since 1975 lol. I prefer class 10 and 30% but I guess you know best.
Interesting. How would a trapline fit into class 10 assets? Or am I misreading what was stated?
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Old 12-12-2021, 05:06 PM
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I don’t think we are derailing the op question and I agree constructive debate is a good thing.

I am a senior rfma holder and licensed accountant.

When you buy a trap line you buy the assets ie tangible assets like cabins equipment and snogos and atv maps and bridges. So there is no intangible components of value. it’s easily defendable when the provincial legislation states you are not able to purchase anything except the improvements. As long as it’s third party sale cra cannot argue what fair value “should be”. A RPT may have fmv considerations.

The provincial cabin requirements mandate that all cabins must be temporary and movable as attached https://www.albertatrappers.com/_fil...59613c812a.pdf

This makes them Mobile homes. You can read about how we were audited and then went to Court regarding requirements of mobile homes here https://taxinterpretations.com/cra/s...2008-0296531i7. (Landsdowne vs cra) They teach this in the cpa cpd tax courses and is well accepted and easy to defend when audited.

Cca is a discretionary deduction so you can claim less than the maximum amount allowed. In some assets like real estate rental or restricted farming you cannot create a loss with cca, this is not the case with an active business like trapping. This means that you can deduct losses against other sources of income.

If you want to assign value to intangible assets I guess you could but why would you want take 5% deduction when you can get 30%.?

SS
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Old 12-12-2021, 10:16 PM
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I've never bought a trapline but I did sell one.

I see no reason why you couldn't write of 100%, after all you don't buy the line, you buy the improvements. That's an expense, part of the cost of running the line, like buying traps.

We had an accountant do our taxes and they always wrote off everything we purchased for the line. Traps, dishes, propane, if we paid for it to use it on the line it got wrote off.

Mind you that was twenty years ago. Maybe that isn't allowed any more. I don't know about that.

But it's certainly worth checking out. Trapping is still considered a business as far as I know and last I heard business expenses could still be written off.

Sorry whiskey jack, I didn't see your post until after I had posted.

I don't know what percent was written off, I always understood it to be 100% but I'm no tax expert. I have no doubt your figure is right and mine wrong.
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Old 12-13-2021, 12:18 AM
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Thanks for the educational bit, WhiskeyJack. I have never dealt with traplines professionally or otherwise and know nothing about it on top of what I read here. Appears to be straight forward if there is no actual value assigned to the trapline itself.

On a side note, I have never seen a mobile or a temporary building when I ran into traplines while hunting. Every single one was a shack that isn’t moving anywhere until taken apart and moved out by someone as trash (highly unlikely by the looks of the ones I saw) or reclaimed by the woods if not maintained. I ran into about a dozen this season (more than I have seen previously combined).
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Old 12-13-2021, 10:23 AM
Big Grey Wolf Big Grey Wolf is online now
 
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Always thought snowmobiles, quads, trucks were a 30% per year taxable write off asset. The cabins are different deduction at 10%/year. Not sure what you would do with rest of the cost of line because it is actually similar to a lease in this case from the province and comes under 'Goodwill'.
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  #21  
Old 12-13-2021, 10:55 AM
Big Grey Wolf Big Grey Wolf is online now
 
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I would recommend that each major asset be documented in "Purchase Agreement" along with price payed to selling trapper. It will make your tax position much easier with CRA.
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  #22  
Old 12-14-2021, 02:18 PM
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Quote:
Originally Posted by fishnguy View Post
Thanks for the educational bit, WhiskeyJack. I have never dealt with traplines professionally or otherwise and know nothing about it on top of what I read here. Appears to be straight forward if there is no actual value assigned to the trapline itself.

On a side note, I have never seen a mobile or a temporary building when I ran into traplines while hunting. Every single one was a shack that isn’t moving anywhere until taken apart and moved out by someone as trash (highly unlikely by the looks of the ones I saw) or reclaimed by the woods if not maintained. I ran into about a dozen this season (more than I have seen previously combined).
I would agree that it would be a lot of work of some of the old log cabins. The Alberta legislation requires removal with in 48 hours as the definition. Cra definition is movable but you will never be asked to actually move it by cra.
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Old 12-14-2021, 02:50 PM
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Quote:
Originally Posted by Big Grey Wolf View Post
Always thought snowmobiles, quads, trucks were a 30% per year taxable write off asset. The cabins are different deduction at 10%/year. Not sure what you would do with rest of the cost of line because it is actually similar to a lease in this case from the province and comes under 'Goodwill'.
My position is there is no goodwill or any other type of intangible asset because your only legally allowed to buy the improvements. Cra cannot make an argument that would create a position where the tax payer would have to act in contravention of other provincial statutes.

Temporary movable structures can be 10% or 30% if you meet the definitions.
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Old 12-15-2021, 10:48 AM
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Quote:
Originally Posted by WhiskeyJack View Post
My position is there is no goodwill or any other type of intangible asset because your only legally allowed to buy the improvements. Cra cannot make an argument that would create a position where the tax payer would have to act in contravention of other provincial statutes.

Temporary movable structures can be 10% or 30% if you meet the definitions.
I was not aware that the province didn't allow any value associated with the RIGHTS or LICENSE to use the line. As Whiskeyjack said CRA wouldn't argue when a third party is involved with assigning the specific values. IE, ignore everything I said LOL
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