Investment incentives by the Government of Canada offer new opportunities to enhance business confidence within our country.
Thanks to incentives offered by the Canadian Government, purchases of capital equipment are more affordable than ever. These incentives mean a reduced taxable income resulting from equipment purchases, providing a hefty discount on the final cost of the capital investment.
In the Fall Economic Statement, Finance Minister Bill Morneau announced investment incentives that will greatly benefit businesses who are considering new investments – particularly those in the manufacturing, processing, clean energy and tech industries. These incentives are available for all purchases of tangible and intangible capital assets made after November 20, 2018, and will continue to be available until its gradual phase-out between 2024 and 2027.
With this program, three major incentives have been proposed:
- 100% of the cost of machinery/equipment in Canada for manufacturing & processing goods will be deductible for income tax purposes in the year it’s put to use. Formerly, this was capped at 25% in the first year
- 100% the cost of specified clean energy equipment will be deductible in the year it’s put to use. Formerly this was also capped at around 15-25% in the first year.
- Using an accelerated capital cost allowance, businesses will be able to deduct even more for depreciation on capital assets, up to 3x the previous amount. This will apply to both tangible & intangible capital assets.
Any Canadian business who has been thinking of shifting investments to another country, or who has been looking at making new investments in equipment or machinery, should be considering these new accelerated CCA rules. Read more about them by clicking here.