Budget 2021: IMMEDIATE CAPITAL ASSET WRITE-OFF

The 2021 Federal Budget proposed to allow immediate
expensing of certain property acquired by a Canadian-
controlled private corporation (CCPC) on or after April 19,
2021 (Budget Day) and before 2024. Up to $1.5 million per
taxation year is available (shared among associated CCPCs,
and prorated for short taxation years), with no carry-forward of
excess capacity.
Property eligible for this immediate write-off is quite broad. It includes all
depreciable capital property, other than certain assets with particularly long lives,
such as buildings, physical infrastructure, pipelines and goodwill. As such, property
acquired in the course of business, such as computers, vehicles, tools and
machinery and equipment, would be eligible.
As this immediate write-off is discretionary, planning should be afforded to
consider current and future profits. Where capital costs of eligible property
exceed $1.5 million in a year, the
taxpayer would be allowed to decide
which assets would be deducted in
full, with the remainder subject to the
normal CCA rules. Other enhanced
deductions already available, such as
the full expensing for manufacturing
and processing machinery or zero-
emission vehicles, would not reduce the
maximum amount available. Generally, property acquired from a non-arm’s length person,
or which was transferred to the taxpayer on a tax-deferred
“rollover” basis, would not be eligible. Also, while the
taxpayer can always claim less than the maximum, claims in
future years would be limited to the usual CCA rates.

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