The federal government recently proposed an accelerated deduction on eligible capital purchases for Canadian Controlled Private Corporations (CCPC’s). This accelerated deduction will be available for the years 2021 through 2023. When this measure is passed, it will allow for the immediate expenditure of new asset additions with a cost of up to $1.5 million each year. The rules apply to most depreciable property purchased after April 19, 2021, but excludes certain assets, such as buildings and intangible assets.
While this does not increase the total deduction that can be claimed in respect of each asset, this is an opportunity for tax deferral and results in greater after-tax cash for businesses in the year of purchase.
One thing to keep in mind is that the $1.5 million must be split between related companies and cannot include assets that have been previously owned by a related person.
The new accelerated deduction is still in draft form and CRA has advised that CCPC’s hold off claiming it at this time, but rather to amend applicable tax returns once the measures receive Royal Assent.
Contact our office to discuss how these rules could benefit your business.