Immediate expensing (CCPC property)
Immediate expensing is a capital cost allowance measure that, as Finance Canada described it, let a Canadian-controlled private corporation (CCPC) deduct the cost of eligible property up to a limit in the year it becomes available for use, with the half-year rule suspended. It was temporary, so check its current status.
Buyers of equipment-heavy businesses meet this when planning the first-year tax cost of an asset purchase through a CCPC. Department of Finance Canada described the measure as temporary immediate expensing for certain property acquired by a CCPC. It said the expensing would only be available for the year in which the property becomes available for use, and that the half-year rule would be suspended for property for which the measure is used.
Status and scope
The measure was time-limited, and the same Finance Canada release proposed extending it to certain unincorporated businesses and partnerships. The CRA’s capital cost allowance folio refers to the immediate expensing incentive for designated immediate expensing property, and its page on what is new for corporations describes proposed changes to reinstate the incentive for certain classes. Because both the dates and the classes have changed, confirm what applies to the property and the year in question.
What to ask
- Is the buyer a CCPC, and what limit applies to it?
- Is the property eligible, and in which CCA class?
- When did or will the property become available for use?
For related background, see the half-year rule and what to know before buying a manufacturer with fixed assets.
Sources
This definition is checked against primary sources. Links were last confirmed on the dates shown.
- 01Department of Finance CanadaGovernmentExpansion of the Eligibility for Tax Support for Business Investments
- 02Canada Revenue AgencyGovernmentWhat’s new for corporations
- 03Canada Revenue AgencyGovernmentIncome Tax Folio S3-F4-C1, General Discussion of Capital Cost Allowance
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