In 2021, the Department of Finance unveiled an enticing opportunity for certain Canadian businesses to immediately claim up to $1.5 million per year in depreciation expense on eligible properties. This strategic move was designed to bolster the economy, facilitate business growth, and incentivize investments in the nation.
In this article, Crowe MacKay's tax advisors help Canadians navigate the complexities of the immediate expensing framework introduced in Budget 2021. Our experts share details on qualifying assets, eligibility, and crucial deadlines related to the policy. By staying informed, businesses can optimize their investments and leverage tax benefits. If you require assistance, connect with us in Alberta, British Columbia, Northwest Territories, or the Yukon.
Scope and Range of Qualifying Assets
While the variety of eligible properties is generous, the program explicitly excludes assets with extended life spans, most notably buildings that would be categorized as Class 1 through 6 assets. Furthermore, with the Department of Finance's recent expansions, more businesses can now consider benefiting from these tax advantages, subject to meeting specific criteria.
Eligibility Criteria for Immediate Expensing
Since this initiative's inauguration, certain eligible persons or partnerships (EPOP) have availed the benefits of the immediate expensing framework. An EPOP includes:
- A corporation that was a Canadian controlled private corporation (CCPC) throughout the year;
- Individuals, barring trusts, there were a resident of Canada throughout the year;
- A Canadian partnership where, throughout the period, each member is a person described in 1. or 2. above.
For a deeper dive into this immediate expensing framework, consider the following references from the Government of Canada:
Gearing Up for the December 2023 Deadline
With September already behind us, it is important to be aware of the timelines established by the Department of Finance for these tax measures.
Immediate Expensing (EPOP)
Until December 31, 2023, an EPOP can leverage these benefits, provided the property is procured, operationally ready, and was essentially unused before its procurement.
Extended Window for Certain Unincorporated Businesses
Unincorporated businesses carried on directly by Canadian resident individuals and partnerships exclusively consisting of Canadian individuals may have an extended window to utilize the immediate expensing incentive until December 31, 2024.
Conclusion
If feasible, consider purchasing capital assets for your business before December 31, 2023, rather than in early 2024. This type of planning can help ensure that your business can benefit from the immediate expensing incentive.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.