The Government of Canada's 2018 Fall Economic Statement was tabled on November 21, 2018. It proposes the following measures for eligible property:
Accelerated Investment Incentive – Providing an enhanced first-year allowance for certain eligible property that is subject to the Capital Cost Allowance (CCA) rules. Under the proposed Accelerated Investment Incentive measure, certain capital property that is subject to the general CCA rules (referred to as "eligible property") will be eligible for an enhanced first-year allowance. The property will be eligible if it is acquired after November 20, 2018 and becomes available for use before 2028. In general, the incentive will be made up of two elements:
- applying the prescribed CCA rate for a class to up to one-and-a-half times the net addition to the class for the year
- suspending the existing CCA half-year rule (and equivalent rules for Canadian vessels and class 13 property)
Full Expensing for Manufacturers and Processors – Allowing businesses to immediately write off the full cost of machinery and equipment used for the manufacturing or processing of goods (class 53). Machinery and equipment currently qualify for a temporary accelerated CCA rate of 50% calculated on a declining-balance basis under class 53. It qualifies if you acquired the property after 2015 and before 2026 for use in Canada primarily in the manufacturing or processing of goods for sale or lease. These assets would otherwise be included in class 43 and qualify for a CCA rate of 30%.
If you acquire property after November 20, 2018, and it becomes available for use before 2028, it will be eligible for an enhanced first-year allowance. The enhanced allowance will initially provide a 100% deduction, with a phase-out for property that becomes available for use after 2023. Full Expensing effectively suspends the half-year rule for property eligible for this measure.
Full Expensing for Clean Energy Investments – Allowing businesses to immediately write off the full cost of specified clean energy equipment (classes 43.1 and 43.2). Specified clean energy equipment acquired after February 21, 1994, currently qualifies for an accelerated CCA rate of 30% calculated on a declining-balance basis under class 43.1. You can depreciate equipment acquired after February 22, 2005, and before 2025, that would otherwise be eligible for class 43.1 (subject to certain limited exceptions), at an accelerated CCA rate of 50% under class 43.2. Many of these assets would otherwise depreciate at lower rates of 4, 8 or 20%.
If you acquire property after November 20, 2018, and it becomes available for use before 2028, it will be eligible for an enhanced first-year allowance. The enhanced allowance will initially provide a 100% deduction, with a phase-out for property that becomes available for use after 2023. Full Expensing effectively suspends the half-year rule for property eligible for this measure.
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