I have a client who just wrote her first book. She is paying approximately $5000 to have the novel published. She is then going to buy the books from the publisher and sell on her own. My question is can we save up the expenses of the publishing and book buying costs that will most likely occur in 2025 to use against sales that probably won’t happen until 2026.
I was trying to find the answer to this under CRA’s artist and writer information but couldn’t find a straight answer.
Thanks in advance for any help on this.
In the case of an author who paid an editor (corporately in this case) I treated it as a deferred cost and amortized it across the sale of the books. Comes to the same thing in the end though.
I concur with everyone else’s answers - these are all reasonable options. My preference would be to call it an inventory cost, as noted by @LMK
Depending on how the author views/operates this business (and how she intends to describe it to CRA if they question it), she might alternatively consider some of the costs as “sunk” costs or “business start up” costs, which could be expensed in the year they were incurred, creating a loss from business (on the T2125) which would offset any other income earned that year. However, if she does this, she cannot claim those costs again - as “cost of goods sold” - in future years (when sales occur).