Have you been putting off a major business purchase like equipment, machinery, a new car, or computer equipment? If at all possible, make your business purchases before December 31 because time is running out on the immediate expensing rules.

Get Immediate Tax Deductions (expensing) for Capital Assets

You may remember our January blog where we told you about the immediate expensing rules for capital properties? Here’s a quick recap:

Overview

In an attempt to stimulate the economy, the government introduced temporary measures that encourage Canadian Controlled Private Companies (CCPCs) to accelerate their purchase of capital property. These measures allow for a full write off in the year of purchase of most capital properties that would otherwise be written off over a number of years. This means that entrepreneurs can accelerate their tax savings on the purchase of most long lived assets, including tools, vehicles, equipment and machinery.

$1.5 million / year limitation

The maximum accelerated depreciation that can be claimed in a year in a company (or group of associated companies) is $1.5 million.

Eligible properties

Certain classes are excluded including Class 1 to 6, 14.1, 17, 47, 49 and 51. These generally include most long lived assets like buildings and structures, as well as unlimited life intangible properties and goodwill. 

This means that most other properties like computers, leasehold improvements, vehicles, equipment and machinery are eligible for the immediate expensing deductions.

December 31, 2023 deadline

The properties must be purchased and available for use on or before December  31, 2023 – that means there is a little under three months left for your company to make these purchases.

Interaction with other temporary measures

Other accelerated deductions, like the full expensing of manufacturing and processing machinery and equipment and clean energy equipment, does not reduce the $1.5 million limit for this temporary immediate expensing deduction.

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Are you considering a purchase of new capital property, and wondering if your company is eligible for the temporary immediate expensing deduction? We’d love to chat with you about your business and how to save you tax!

Let’s talk tax!