03 Dec Accelerated Investment Incentive (AccII) and the impact it will have on your bottom line.
Posted at 09:20h in Acculift News
The government of Canada proposes to introduce an Accelerated Investment Incentive (AccII) to allow businesses in Canada to deduct the cost of their capital investments more quickly. Including crane and lifting equipment used in your manufacturing processes.
When Canadian businesses make investments in capital assets such as buildings, machinery, and equipment, current tax rules require them to deduct the cost of these investments over a time period that corresponds to the expected length of returns from the investment (your accountant will know the corresponding write off periods for the classifications of equipment). The new investment incentives proposed in the Fall Economic Statement will allow businesses to write off a larger share of their costs in the year an investment is made for manufacturing equipment.
The proposed rules will not change the total amount that can be deducted for tax purposes with respect to eligible acquisitions, rather, it will substantially increase the tax deduction available in the year of the purchase. Class 53 (manufacturing and processing machinery and equipment will be eligible for a full deduction in the year of acquisition). Previously, it took a few years to realize the tax benefits of purchasing equipment (capital cost depreciation), now, companies can take full advantage of the deduction in the year they purchase the equipment. This incentive is available for an eligible property after November 20th, 2018 AND if the property becomes available for use before 2028.
WHAT THIS MEANS TO YOUR BUSINESS
Talk to your accounting department or accountant about the financial impact this will have on your income statement when purchasing new lifting equipment. Generally, it will mean you are able to use the CCA deduction for crane and lifting equipment purchases in the year that you purchase it versus spread out over three years. A faster use of any tax deduction is a good thing for your bottom line.