There are a number of incentives currently available to Canadian taxpayers concerning Y2K computer problems. They include the following: (1) There is a 100 per cent deduction on computer hardware and software purchased by small, unincorporated businesses between January 1998 and June 1999 which address Y2K problems. (2) This deduction includes replacement of computer chips, but is not applicable to upgrades. (3) To be eligible for such incentives, taxpayers must elect to use the accelerated capital cost allowance (cca) deduction for the cost of any Y2K solutions. To make this election, the taxpayer must attach to his/her return a letter which describes the purchased property, its cost and date of acquisition. This document also should provide a description of the equipment replaced.
Source: Robertson Hill Parker Prins, Business Matters, October 1998.