13 Oct 2016
Depreciate Your Drone and Drone Accessories!
Written by: Steve Reed, CPA, CA
Aerial drones (or drones), are defined in Wikipedia as “unmanned aerial vehicles,” and are being used in many commercial, scientific, agricultural and military applications. Drones have been used in the film industry as an alternative to helicopters or manned aircraft, and in the real estate industry to photograph homes and real estate for sale from above. More recently, ESPN has reached an agreement to broadcast the Drone Racing League season!
Canada Revenue Agency (CRA) was asked for the proper capital cost allowance (CCA) class to determine the rate of depreciation for an aerial drone. CRA’s response was, “The specific class to which its cost is to be allocated must be determined with reference to the particular property and facts of the situation. Factors to consider will include not only the specific functions the particular property is designed to perform but also, amongst other things, the actual use to which the property has been put to use by the taxpayer.”
Although the Income Tax Act does not define the term “drone,” reference should be made to the ordinary use of the term. CRA looked to the Canadian Aviation Regulations, which describes aerial drones as a type of aircraft. Accordingly, it is their view that an aerial drone would generally be included in Class 9(g) of the Income Tax Regulations, which has a CCA rate of 25%.
Confirmation of this generous drone depreciation rate will come as welcome relief for all those businesses utilizing this high tech equipment.
If you require additional information on this topic, please feel welcome to contact a member of the Manning Elliott Tax Team for assistance at 604-714-3600.
The above content is believed to be accurate as of the date of posting. Tax laws are complex and are subject to frequent changes. Professional advice should be sought before implementing any tax planning. Manning Elliott LLP cannot accept any liability for the tax consequences that may result from acting based on the information contained therein.