Eligible capital expenditures

You may buy property that has no physical existence, but gives you a lasting economic benefit. Some examples are goodwill, franchises, concessions, or licences for an unlimited time period. We call this kind of property "eligible capital property" and the price you pay for it is an eligible capital expenditure.

You cannot deduct the full cost of an eligible capital expenditure since it is a capital cost and gives you a lasting economic benefit. However, you can deduct part of its cost each year. We call the amount you can deduct your “annual allowance.”

The cumulative eligible capital (CEC) account is the bookkeeping record of your eligible capital property that you set up to determine your annual allowance. You also use your CEC account to keep track of the property you buy and sell. You base your annual allowance on the balance in your account at the end of your fiscal period.

See Chapter 4 of the Fishing Income guide for information on:

• calculating your annual allowance
• electing to treat the sale of an eligible capital property (other than goodwill) as a capital gain in your CEC account
• selling an eligible capital property

Forms and publications

• Fishing Income guide (T4004)
• IT123, Transactions Involving Eligible Capital Property
• IT143, Meaning of Eligible Capital Expenditure
• IT259, Exchanges of Property