Budget 2021: “Immediate expensing” of asset acquisition costs by CCPCs

Under Canadian tax rules, companies which acquire capital assets are required to deduct, or write off, the cost of those assets over a period of years, under the rules provided in the Capital Cost Allowance system.

The Budget proposes that Canadian-controlled private corporations (CCPCs) would be eligible to deduct the full cost of eligible property purchased, in the year in which that property becomes available for use by the corporation. This “immediate expensing” is to be provided for acquisitions of eligible property on or after the Budget date (April 19, 2021) and before January 1, 2024.

The maximum amount of property acquisition costs which would qualify for immediate expensing is $1.5 million per taxation year, and that limit must be shared among associated members of a group of CCPCs.

For more on the 2021 Federal Budget, please click here.