It will be important to track assets purchased on or after November 21, 2018, to ensure you maximize your annual capital cost allowance deduction (“CCA”).
On November 21, 2018, the federal government released its 2018 Fall Economic Statement. Included in the statement were specific provisions allowing the acceleration of CCA for assets purchased on or after November 21, 2018. Such assets are hereon referred to as accelerated investment incentive property (“AIIP”) and outlined below is general information surrounding the tax treatment of AIIP you should be aware of:
Half-Year Rule
Subject to certain restrictions, the half-year rule will not apply to AIIP purchased and in use anytime during the period starting November 21, 2018, and ending December 31, 2027.
Accelerated First-Year CCA
The cost of AIIP purchased and in use, anytime during the period November 21, 2018, and ending December 31, 2023, is grossed-up by 50% for the purpose of computing CCA in Year 1. In Year 2, the CCA will be computed on the original cost minus the CCA deducted in Year 1.
Full CCA in First Year
The cost of AIIP purchased and in use for manufacturing and processing purposes, anytime during the period November 21, 2018, and ending December 31, 2023, can be fully deducted in Year 1.
The CCA applicable to the cost of AIIP purchased and in use during the period starting January 1, 2023, and ending December 31, 2028, is gradually phased-out.
Please contact your Partner at SB Partners to learn more, or to discuss any of the information above in more detail.
