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Allan Madan, CPA, CA
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The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.
ABOUT THE AUTHOR
ALLAN MADAN
CPA, CA
Allan Madan is a CPA, CA and the founder of Madan Chartered Accountant Professional Corporation. Allan provides valuable tax planning, accounting and income tax preparation services in the Greater Toronto Area.
We have small business – manufacturing metal parts. Can we claim on the material? Machines equipment depreciation? Tools expenses? Heat/electricity? Any more suggestion? Thank you for all the informative videos.
Hi Vanessy,
Material wasted or consumed during the manufacturing process can be written-off. However, materials that are transformed during manufacturing into the final product are added to the “Inventory Account – Finished Goods”, which is an asset. Likewise, raw materials that are left-over at the end of the year should be added to the “Inventory Account – Materials on hand”, which is also an asset. Tools over $500 should be capitalized and depreciated over time. Tools under $500 should be deducted in the year they are purchased. Heat and electricity are operating costs and can be deducted in the year.