Newbie here - Tax Questions!

[pinktarten]

Hi there, this is my first year so I'm learning a ton while preparing my income tax for the year. (tick tock tick tock)

As I've purchased lots of new stuff for the day care - I'm confused about which ones are deductible as expenses and which ones must be designated as capital and thus only deduct CCA. The items I'm not certain are:

- Stroller
- Car Seat
- High Chair
- Swing
- Baby Gates
- Bumbo
- Carriers (Bjorn, Ergo, etc.)

Also as this is my first year, I have relatively low revenue compared to how much I've spent supply wise (half of my earned fees went into expenses). Would CRA be difficult with me?

[Inspired by Reggio]

Most new business do not earn much 'profit' the first year - it is normal for our first few years of accumulating both equipment and clients to have a low income ... it will not be a red flag if you are in the 'break even' position the first year ... heck some people take 2-3 years to get a true 'wage' from doing this ... those first years the 'investment' is being home with their own children so having a 'break even' wage for doing it they are still 'ahead' even if it does not look like it on paper cause if they worked out of the house and had to pay childcare to someone else and so forth

Choosing what to put under CCA and what to put under a general expense is tricky for us - my least favorite part of taxes and why I used an accountant my first two years .... many of the 'categories' for deciding on CCA just do not apply to our industry - they are more for bigger businesses and so forth.

So while in my first year things like a baby gate or high chair while way under the typical guideline that if it costs more than $250 and typically lasts more than 5 years it is a CCA and you can only right off 20% each year for the next 5 years - the accountant added it all up as an initial CCA start up cost and 'bundled' them in cause it was beneficial over the long run for me to do so .... she explained that in future years if my baby gate 'breaks' and I have to replace it I can write 100% of it off because it is well under the 'guide' so to speak.... just like a 'stapler' might last well over 5 years but it costs $10 so you can write the whole thing off verses $2 a year for 5 years which is just kinda silly.

Hope that helps!