Goodwill amortization
Goodwill amortization is the accounting practice of writing down the value of purchased goodwill over time. It is an accounting term rather than a legal one. Under current Canadian accounting standards for public companies, goodwill is not amortized but tested for impairment; tax treatment of goodwill is separate and follows the Income Tax Act.
How BC law treats it
There are no BC goodwill accounting rules. Accounting standards are set nationally in the CPA Canada Handbook; under IFRS (IAS 36), goodwill is tested for impairment at least annually rather than amortized. For tax, purchased goodwill is Class 14.1 property deducted through capital cost allowance under the Income Tax Act.
What it means for your business
A buyer of a business should get accounting and tax advice on how goodwill in the purchase price will be treated.
Risks and common mistakes
Confusing book amortization with tax deductions can lead to incorrect expectations about the after tax cost of an acquisition.
For the full explanation, see our entry on Goodwill.
General information about British Columbia and Canadian law, current to October 2026. It is not legal advice.
