In fact, the Federal Government announced as part of an economic statement that companies will have the opportunity to recover more quickly the cost of certain investments by allowing an enhanced deduction in the year of acquisition.
This accelerated investment incentive will be available for property acquired after November 20, 2018. Québec will align with certain changes announced by the Federal Government with respect to accelerated depreciation.
Deduction the first year
The Accelerated Investment Incentive will provide an enhanced deduction in the first year for capital assets subject to capital cost allowance (CCA) rules, except for Class 53 (machinery and equipment for manufacturing and processing), 43.1 and 43.2 (clean energy equipment), which will instead be eligible for a full deduction (100%).
The half-year-rule will be suspended for property eligible for these new measures. With this change, a property that is currently subject to the half-year-rule will essentially qualify for enhanced CCA equal to three times the normal first-year deduction, and the property that is not subject to it will be eligible for enhanced CCA equal to one and one-half times the normal first-year deduction.
In 2019, a taxpayer acquires a Class 10 property (30% CCA rate) in the amount of $ 1,000. The taxpayer will be able to deduct $ 450 ($ 150 X 3) instead of the $ 150 (1,000 X 30% X 1/2) that would have been deducted in the first year under the half-year-rule.
In 2020, if no property is acquired in Class 10, the taxpayer will deduct $ 165 (1,000 – $ 450) X 30%).
Details are disclosed in the document Investing in the middle class jobs produced by Department of Finance Canada (page 58). For more information, you may contact our Tax Specialists.