Where I should put lease payments on T2?

Hello there:

I am doing a T2 in which client has capitalize leases. I capitalize the lease for accounting purposes. but where I should put lease payments on T2. On S8supp I find place where I can put operating lease capitalized and this balance my S8supp. But I could not find any line on S1 where I can deduct lease payments only for tax purposes. thanks in advance for help.

Answer

HI..   Maybe look on the CRA site for further study. 

From my Accounting experience, examination of the exact lease would help determine what is the expense

portion and what is the capital portion.   For example if it is a multi year lease, then is there reason to set up current year finance obligation, and Long term finance obligation?  I think so.  

Then related to that long term obligation it would have included in it, possibly the finance and admin charge, as well as the  Interest charge. 

So depending on how the lease is written, you may or may not have interest expense to capture as an expense in the current year.  As to the capital..   Well the Full cost of the asset.. normally code into the asset class.. (asset) 

on the other side, the Current and longterm Financing  Liability. 

Then the "Expense"  Would be the CCA on that Asset..    Dr to Depreciation Expense, and Cr to Accumulated Depreciation (under the assets) .  

I hope that helps. 

 

Was this answer helpful? Yes No

No answers have been posted

More Actions

People come to ProFile for help and answers—we want to let them know that we're here to listen and share our knowledge. We do that with the style and format of our responses. Here are five guidelines:

  1. Keep it conversational. When answering questions, write like you speak. Imagine you're explaining something to a trusted friend, using simple, everyday language. Avoid jargon and technical terms when possible. When no other word will do, explain technical terms in plain English.
  2. Be clear and state the answer right up front. Ask yourself what specific information the person really needs and then provide it. Stick to the topic and avoid unnecessary details. Break information down into a numbered or bulleted list and highlight the most important details in bold.
  3. Be concise. Aim for no more than two short sentences in a paragraph, and try to keep paragraphs to two lines. A wall of text can look intimidating and many won't read it, so break it up. It's okay to link to other resources for more details, but avoid giving answers that contain little more than a link.
  4. Be a good listener. When people post very general questions, take a second to try to understand what they're really looking for. Then, provide a response that guides them to the best possible outcome.
  5. Be encouraging and positive. Look for ways to eliminate uncertainty by anticipating people's concerns. Make it apparent that we really like helping them achieve positive outcomes.

Select a file to attach: