Accelerated Investment Incentive
The Accelerated Investment Incentive (AII) is a federal tax measure that gives an enhanced first-year capital cost allowance on certain eligible property. The CRA says its general rule has two elements: applying the class’s rate to more than the net addition to the class, within a limit, and suspending the half-year rule. It applies within a window of acquisition and use dates, with a phase-out.
A buyer of equipment may meet this term if the accountant models the tax effect of the purchase. The CRA describes the Accelerated Investment Incentive as a measure that provides an enhanced first-year allowance for certain eligible property that is subject to the capital cost allowance rules. It sits inside the CRA’s guidance on claiming capital cost allowance.
How it works
The CRA says the property must be acquired after a stated date and be available for use before a stated year. A phase-out begins for property that becomes available for use after 2023, reducing the enhanced allowance. The enhanced allowance can be claimed only in the first tax year the property becomes available for use. The general rule does not apply to some classes, including those covered by full expensing measures, which the CRA page lists.
What to ask
- Whether each asset is eligible property and which class it falls in
- When each asset becomes available for use, since that date decides where it sits in the phase-out
- How the purchase price is allocated across assets
For funding the equipment itself, see How can I finance equipment in a business acquisition?
Sources
This definition is checked against primary sources. Links were last confirmed on the dates shown.
- 01Canada Revenue AgencyGovernmentAccelerated investment incentive
- 02Canada Revenue AgencyGovernmentClaiming capital cost allowance (CCA)
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