Opinion - Fair market value for P7000

[Garnick]

Good morning Fellow Forum Folks,

As you may have guessed, I love alliteration.  Your mission this morning, should you chose to accept it, is as follows:

I'm not sure I should be asking for such information or opinions on this part of the forum, but I'll give it a go regardless.  For a very specific reason I would like to get some feedback concerning what might be considered a Fair Market price for my Epson P7000 printer bought new, July 2017.  I have no immediate wish to sell the P7000, but since I am basically closing my business, as well as my GST/HST sales tax account, I apparently need to provide another return including the Fair Market value of property up to the point of closing.  Since the P7000 is my most recent and newest piece of equipment, it's the one I am most concerned about. 

Hey, what can I say?  It's a government thing 

Any replies/opinions will be much appreciated and taken into account.

Thank you all and have a great day 

Gary

[Mark D Segal]

You may find these links useful:

Fair Market Value on Closing

Capital Cost Allowance in Canada

Needless to say, when it comes to taxes and reporting requirements, the answers are always more complicated than the questions.  :-)

[JeanMichel]

Hi Gary,
Just for fun I checked our friend Google and found one eBay listing for a P7000 for $700 Cdn. This is probably already higher that the depreciated value on your books.
Although we never met, I saw some of the printing you did for one of your clients, I am sure that you will be missed by them. Best wishes for your retirement.

[Mark D Segal]

Hi Gary,
Just for fun I checked our friend Google and found one eBay listing for a P7000 for $700 Cdn. This is probably already higher that the depreciated value on your books.
Although we never met, I saw some of the printing you did for one of your clients, I am sure that you will be missed by them. Best wishes for your retirement.

Something wrong with that. If we're talking an Epson Surecolor SC-P7000 printer that is only about 18 months old, the price new today is CAD 3529 in downtown Toronto after a CAD 1000 rebate, so the depreciated value no matter what tax laws one goes by has to be far more than 700.

[Garnick]

Something wrong with that. If we're talking an Epson Surecolor SC-P7000 printer that is only about 18 months old, the price new today is CAD 3529 in downtown Toronto after a CAD 1000 rebate, so the depreciated value no matter what tax laws one goes by has to be far more than 700.

Hi Mark,

Hmmm....I had just started a reply to Jean Michel when I was notified that another reply had been posted, so I returned to the discussion and read your offering.  Now, first things first; thank you for your initial reply Mark.  I definitely agree with your statement concerning the questions and answers when closing a business.  When I sent the required information along with a cheque to the proper government location to close my business as a corporation, the only confirmation I have received is the fact that my cheque has been cashed.  After talking with a friend who had done the same a number of years ago, he mentioned that he had received absolutely no conformation at all, so I consider myself lucky in that situation.  When I called the CRA in mid October to ask about cancelling my GST/HST account I was told that I would receive a confirmation by mail, which I finally did a couple of days ago.  However, even though I am no longer registered for GST/HST I apparently still have to send returns for taxable supplies and equipment etc.  At this point I believe yet another phone call is in order to clarify EXACTLY what they want from me now.  I'll check with my accountant first and have him explain the situation in perhaps a more understandable manner before I call the CRA again.  I'm not in any hurry, since I've never missed a return in all of the years I was in business. 

Now to Jean Michel's reply.  WOOOOW!¡!  I think I might grab the Google P7000 and sell my own with $$$ left over.  Yes indeed, there is something wrong with that price.  Mine is definitely the Epson SC-P7000, and I have no desire to sell it, just what the CRA might consider a Fair Market Value for it.  The $700 sound like a great place to start, but I'm sure I would not be able to get away with that, no would I try.  I'll still do the odd small job for previous customers who have become friends, but the business has declined since I moved it to my home location, no surprise.  I don't consider myself retired, since this is what I've been doing since the late 60's, and like HYPO, it's in my veins I guess.  A bit of darkroom humour there of course, or perhaps just DARK.

Thank again Mark and Jean Michel,

Gary 

     

 
   

[Mark D Segal]

Yup - well, what to say; one thing you can really count on those bloodsuckers for is to cash your cheque! At least they acknowledged it  :-)

Your accountant should be able to give you correct guidance on how to approach the valuation of the SC-P7000.

[Garnick]

Yup - well, what to say; one thing you can really count on those bloodsuckers for is to cash your cheque! At least they acknowledged it  :-)

Your accountant should be able to give you correct guidance on how to approach the valuation of the SC-P7000.

Thanks again Mark,

Yes, I will try to talk with my accountant before calling the CRA again.  I'm pretty certain I know what this is about, but not sure.  Of course when the printer and consumables that I still have an use were initially purchased, I recouped some of the GST/HST as a refund in my next return.  I imagine the CRA now wants some of that "refund" back, since I am now in possession of the equipment and supplies instead of the corporation.  My computers are old, but still very workable, but no real value to anyone else, so they would be assessed at a very low price, at least by me.  My main concern is the 18 month old SC-P7000 printer and it's value now on the open market.  I'm not trying to evade tax, but I don't want to get screwed either.  I'll keep you updated as this progresses, if you're interested.

Gary   

 

[Mark D Segal]

With appropriate guidance you are very unlikely to be "screwed". Those folks (accountants, CRA etc) deal with this kind of thing routinely - at least as far as the principles underlying the valuation go, doesn't matter much whether it's a printer or anything else. I wouldn't lose too much sleep over it. Once one of them can tell you how many years of depreciation would be reasonable for a machine like that, and I would guess something in the range of three or four, the rest of it is just arithmetic. If the idea is to minimize taxes at closure, presumably you would want write-off into costs as high a value as the rules permit.

[JeanMichel]

Hi again.
I thought that your printer might be older than just 18 months. However, you accountant will know that printers fall in CRA’s class 50 and as such the yearly depreciation allowed is 55%; there is of course the half-year rule for the first year. It would be reasonable to claim that the fair value is less than the depreciated value since a willing buyer would be buying the printer without warranty, etc.

[Mark D Segal]

It depends on what you are trying to do. If the objective is to minimize taxes, you want to maximize deductible costs, of which depreciation is one. If you are trying to sell the business as a going concern, you would want to maximize current asset value and potential future revenue to the extent reasonable.

[enduser]

When there were newspaper-like publications where you could list things for sale, I remember their recommendations on pricing used goods. They said there are always two government prices, a high valuation if it was to their benefit and a low one if you were the beneficiary of the valuation.

They had their own value method and it began with "Like New" This meant original packaging, un-marked and indistinguishable from a brand new item, is worth 50% of the new price. The theory was that it was close to what a dealer would pay for a new item.

Looking at large format printers on Gumtree, I think that might be a bit high.