Patents are normally allocated to Class 44 where they are subject to declining balance CCA calculations at a 25 percent rate. However, a taxpayer can elect to allocate these assets to Class 14, where they are subject to straight-line CCA over their legal life. Under what circumstances would this election be desirable?

Question

Quizplus · Accepted Answer

The Answer is The election could be useful if the patent is acquired near the end of its legal life. For example, if only three years remained, the annual write off would be one-third of the cost, resulting in larger deductions than would be the case using Class 44's 25 percent declining balance rate.

Patents Are Normally Allocated to Class 44 Where They Are