Planning to purchase capital assets?
As a Canadian controlled private corporation (CCPC), your small business has access to CCA (Capital Cost Allowance) immediate expensing – a powerful tax incentive that can help your business grow and thrive.
As announced in the 2021 Federal Budget, a smarter tax planning strategy is now available to CCPCs that are looking to acquire capital assets, and the timing and application of these changes could provide a valuable opportunity for CCPCs.
Let’s discuss.
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What is CCA Immediate Expensing?
Immediate CCA expensing is a tax incentive that allows CCPCs to deduct the cost of certain capital expenses from their taxable income when they are incurred, instead of writing them off over several years as depreciation.
According to the Department of Finance Canada, “this immediate expensing would be available for “eligible property” acquired by a CCPC on or after April 19, 2021, and that becomes available for use before January 1, 2024, up to a maximum amount of $1.5 million per taxation year”.
CAA Immediate Expensing Requirements
For capital property to be eligible for CCA immediate expensing, certain requirements must be met, such as:
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“Eligible property” includes capital property that is subject to capital cost allowance rules, excluding Classes 1, 2, 3, 4, 5, 6, 14.1, 17, 47, 49, and 51. Notably, this includes vehicles and most equipment that a small business would use in its normal operations.
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Immediate CCA expensing is only available in the year the property becomes available for use, meaning the equipment needs to be operational and in use in order to immediate expensing to apply.
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CCA expensing is restricted by any existing rules that pertain to CCA deductions.
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Advantages of CCA Immediate Expensing
Overall, CCA immediate expensing is a great way for Canadian controlled private corporations to get ahead by writing off the full cost of equipment purchased in the year it was acquired rather than over several years.
Immediate CCA expensing allows businesses to maximize their tax deductions and benefit from reduced taxation, enabling them to get ahead and remain competitive in today’s ever-evolving market.
Accelerate Cash Flow & Unlock Growth Opportunities
One of the main advantages of CCA immediate expensing is that it enables businesses to accelerate their tax deductions and therefore cash flow and unlock growth opportunities to help CCPCs achieve their goals in the short term, and remain competitive in this high inflationary period in Canada’s history.
By permitting businesses to write off the full cost of certain purchases in the same tax year they are made, CCA immediate expensing allows CCPCs to access tax benefits faster and reinvest them into future projects or operations, helping them reach their financial goals more quickly.
Immediate CCA expensing also provides businesses with long-term benefits, as it allows them to maximize savings by reducing their overall taxable income. This ensures that businesses are able to reap the rewards of CCA immediate expensing, not just in the current year, but for years to come.
Maximize Savings with Long-Term Benefits
For companies already making large capital investments, CCA immediate expensing can also provide long-term savings.
By allowing businesses to write off the full cost of certain purchases in the same tax year they are made, CCPCs are able to save money over time by avoiding accruing depreciation expenses throughout the years.
Reduce Taxable Income with CCA Immediate Expensing
Businesses can also use CCA immediate expensing to reduce their overall taxable income, resulting in lower taxes and more cash on hand for new investments or operations.
CCA immediate expensing helps businesses maximize their tax deductions and benefit from reduced taxable income levels.
Leverage CCA Immediate Expensing to Stay Ahead of the Competition
CCA immediate expensing is a valuable tax incentive available to Canadian controlled private corporations, as it provides them with an opportunity to get ahead and remain competitive in today’s ever-evolving market.
By taking advantage of this immediate CCA expensing, CCPCs can unlock access to funds faster, maximize savings, and reduce their overall taxable income.
Start taking advantage of this tax incentive and unlock the potential of CCA immediate expensing for your business!