22 Nov 2018 Fall Fiscal Budget – Tax Changes
By Team Clearline
(November 22, 2018) – The Federal Minister of Finance, Bill Morneau, delivered the Liberal Government’s Fall Fiscal Update yesterday in Ottawa. To help you navigate the tax updates and changes, we have summarized the highlights below.
Corporate Tax Changes
Capital Cost Allowance (“CCA”) Changes
A number of adjustments have been made in regards to CCA in order for Canadian corporations to stay competitive with their US counterparts.
- Manufacturing and Processing Machinery and Equipment – The Fiscal Update proposed to permit that certain manufacturing and processing machinery and equipment acquired after November 20, 2018 will be 100 percent deductible in the year of acquisition. This 100 percent deduction will be available until 2024 and then phased out over a four year period.
- Clean Energy Equipment – Specified clean energy equipment acquired after November 20, 2018 will be 100 percent deductible in the year of acquisition. This 100 percent deduction will be available until 2024 and then phased out over a four year period.
- Other Capital Assets – Other eligible capital assets will now be exempt from the “half-year rule” which limited the tax deprecation by 50 percent in the year of acquisition. Instead, the first year deduction will actually be increased by 50 percent. This applies to eligible capital assets acquired after November 20, 2018. The half-year rule exemption and first year deduction increase of 50 percent will be available until 2024 and then phased out over a four year period. For example, motor vehicles, as well as some passenger vehicles with a cost of less than $30,000 were normally subject to a 30 percent deprecation rate (15 percent in the first year because of the half-year rule), but will now be subject to a 45 percent depreciation rate in the first year and the regular rates thereafter.
Other Tax Measures
The 2018 Fall Fiscal Update did not make any alterations to any tax rates or other tax changes.