If such property has not been disposed of after five years, it must be transferred to the general class to which it would have originally been placed. To provide tax relief for certain small and medium sized enterprises attempting to make their computer hardware and software Year 2000 compliant, both the federal and Ontario governments allowed a special, temporary provision in 1998 and 1999. The equipment must have been purchased to replace non-compliant hardware or software originally acquired prior to 1998. Seventy-five per cent of such expenditures may be amortized at a rate of seven per cent per year on a declining balance basis. The Income Tax Act imposes restrictions on expense deductibility relating to passenger vehicles.
Automobiles used in the course of carrying on a business are subject to restrictions.
For more information about the type of deductible expenses and the business use calculation, refer to Use of Company Cars . There was a time when a simple rule of thumb could be provided with respect to an automobile lease versus purchase decision. As this is no longer the case, each situation must be reviewed individually. The Income Tax Act imposes a restriction on the deductibility of business-related meals, beverages and entertainment expenses. With certain exceptions, only 50 per cent of such expenses are deductible.