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Ottawa/CMEDIA: Proposals to provide temporary immediate expensing in respect of certain property acquired by a Canadian-Controlled Private Corporation (CCPC) were included in Budget 2021.
Up to a maximum amount of $1.5 million per taxation year would be available for use before January 1, 2024, for immediate expenses for “eligible property” acquired by a CCPC on or after April 19, 2021. The immediate expensing of $1.5 million would only be available for the year in which the property becomes available for use would be shared among associated members of a group of CCPCs.
The limit would be prorated for taxation years that are shorter than 365 days.
Eligible property under this new measure would be a capital property that is subject to the capital cost allowance (CCA) rules.
If capital costs of eligible property in a taxation year exceed $1.5 million, CCPCs would be allowed to decide to which CCA class the immediate expensing would be attributed and any excess capital cost would be subject to the normal CCA rules. The availability of other enhanced deductions under existing rules would not reduce the maximum amount available under this new measure. Moreover, the immediate expensing would not change the total amount that can be deducted over the life of a property.
The government is also proposing to expand eligibility for the $1.5 million temporary immediate expensing measure to investments in eligible property made by unincorporated businesses by Canadian resident individuals (other than trusts) and certain eligible partnerships.
“This measure would become effective for investments made on or after January 1, 2022, and would become available for use before 2025 (in the case of an individual or a partnership all the members of which are individuals) or before 2024 (for other partnerships).
Eligible partnerships would include those in which the totality of the members (at all times in the relevant taxation year) would otherwise have been eligible to benefit from the measure had they carried on the business of the partnership directly. Multi-tiered partnerships (i.e., partnerships with other partnerships as members) would be excluded.
The limit of $1.5 million would be subject to rules to protect the integrity of the tax measure as well as to ensure that the limit is adhered to by each proprietor, partnership, partnership member, and each of their respective economic groups, said a news release on Feb 4.