September 27, 2023
CCA Immediate Expensing benefits Ending in 2023
Canadian Controlled Private Corporations (“CCPCs”) have until December 31, 2023 to acquire property eligible for temporary immediate expensing measures. The temporary immediate expensing measures allows for eligible businesses to claim up to $1.5 million in tax depreciation on eligible property acquired and available for use before January 1, 2024. This is done through a capital cost allowance (CCA) claim on each CCPCs tax return. The $1.5 million CCA claim limit is per taxation year and is shared between an associated group of CCPCs, with the limit being prorated for shorter taxation years.
Eligible property encompasses depreciable assets subject to the CCA rules, with the exception of property classified within CCA classes 1 to 6, 14.1, 17, 47, 49, and 51. These excluded classes typically comprise assets known for their extended lifespans, including buildings, fences, and goodwill.
Immediate expensing would generally only be available on eligible property that:
• Was neither previously owned by the taxpayer or a non-arm’s length person
• Has not been transferred to the taxpayer on a tax-deferred rollover basis
No carry-forward of excess capacity is allowed so CCPCs looking to benefit from the final year of immediate expensing should ensure eligible property is acquired and available for use by December 31, 2023.
Note: Sole proprietors and Canadian partnerships, where all members are individuals, have until December 31, 2024, to procure eligible property eligible for immediate expensing.
About Associated Corporations
The concept of associated CCPCs for immediate expensing has been expanded to include individuals and partnerships. This is done by deeming individuals and partnerships related each other and CCPCs as “deemed corporations”. By deeming individuals and partnerships as corporations, the existing association rules can be applied for sharing of $1.5 million immediate expensing limit (per taxation year).
Still Have Questions About The CCA Immediate Expensing benefits?
Manning Elliott is here to help with all your tax needs. If you need help or still have questions about the immediate expensing benefits in Canada, please reach out to our tax experts or contact us through one of our Manning Elliott branches.
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NOTE: Tax laws are complex and are subject to frequent change. The contents of this article are not intended to represent legal or tax advice. Please consult your tax adviser before employing any strategies discussed within this article.