What counts as a fixed asset
A fixed asset is something you buy to keep and use for more than one year, not to resell. A delivery van, an oven, a computer, shop shelving or an office building generally qualify. The same item bought by a retailer for sale to customers would be inventory instead. The intended use decides the category.
Fixed assets sit on the balance sheet as non-current assets, usually listed at cost less accumulated depreciation. The CRA’s tax rules refer to depreciable property, which overlaps with fixed assets but is not identical.
Asset or expense: an illustrative example
Suppose a landscaping business buys a $6,000 mower and a $40 pair of gloves in the same month. These amounts are illustrative. The mower is expected to last several years, so it is recorded as a fixed asset and depreciated. The gloves are used up quickly and recorded as an expense straight away.
Most businesses set a written threshold, for example, any purchase above a chosen dollar amount that lasts beyond a year is treated as an asset. The right threshold depends on the size of the business and should be applied consistently.
Common mistakes
Coding a large equipment purchase to an expense account understates assets and distorts the year’s profit. Adding repairs to the asset’s cost is the opposite error. Ordinary repairs and maintenance are generally expenses, while a major upgrade that extends the asset’s life may be added to its cost.
Land and buildings are often bought together. Land is not depreciable property, so the purchase price should be split. Keeping personal-use items, such as a vehicle used partly for personal driving, in the register without a note of business use is also a frequent problem.
What to discuss with your accountant
Keep a fixed asset register listing each item, its purchase date, cost, supplier, date ready for use, and any sale or disposal. Ask what threshold and useful lives are used, how the accounting depreciation will connect to capital cost allowance for tax, and what happens on the sale of an asset.
Tell your accountant when an asset is sold, scrapped or stolen. The tax result of a disposal depends on the asset’s class and history, so do not assume the sale price is the only number that matters.
Sources & editorial notes
Sources checked October 24, 2026. The examples are illustrative and provide general information. Discuss how the guidance applies to your circumstances with your accountant.
- What is depreciation?BDC
- Claiming capital cost allowanceCanada Revenue Agency
- Classes of depreciable propertyCanada Revenue Agency
Rules and guidance can change. Use the current official source and confirm the treatment for your facts. To flag an error, contact Sora.