Recap of CCA (capital cost allowance) changes.
On November 21, 2018, the government announced a temporary enhanced first-year allowance,
referred to as the Accelerated Investment Incentive (“AII”), equal to up to three times the
previously applicable first-year allowance. In addition, the government announced immediate
expensing for investments in machinery and equipment used in manufacturing or processing, as
well as for specified clean energy generation equipment.
Federal Budget 2021 – expanded measure on immediate expensing
The budget announced a temporary measure allowing immediate expensing in respect of certain
property acquired by a Canadian-Controlled Private Corporation (CCPC):
must be “eligible property” acquired by a CCPC on or after April 19, 2021 and that becomes
available for use before January 1, 2024.
up to a maximum amount of $1.5 million per taxation year.
the $1.5 million limit would be shared among associated members of a group of CCPCs.
for those CCPCs with less than $1.5 million of eligible capital costs, no carry-forward of
excess capacity would be allowed.
Eligible Property
Eligible property would be capital property that is subject to the CCA rules. There is an exclusion
for property in CCA classes 1 to 6, 14.1, 17, 47, 49 and 51 – which are generally long-lived assets,
most commonly buildings and goodwill.