Digital Assets and IP Qualify for 100% Tax Write-Offs

Evelyn Jacks

Good news for business investors!  The April 19, 2021 federal budget contained over $2 billion dollars in tax write-offs for investments made on or after budget day and before 2024 to a maximum claim of $1.5 million.  There are a few exceptions, but most property acquired used by CCPCs will qualify for a 100% write off when available for use, and this includes digital assets and intellectual property.

Specifically, a Canadian Controlled Private Corporation (CCCP) will be able to claim CCA on a newly acquired assets at a rate of 100% in the year of acquisition up to a maximum claim of $1.5 million.

Taxpayers will be able to decide which classes of assets would be subject to immediate expensing where CCA additions exceed $1.5 million in the year.

Properties that do not qualify fall into the following classes:

1. Buildings that fall into Class 1, 3 or 6, which have CCA rates of 4%, 5% and 6% respectively. This class also includes elevators, electrical wiring, light fixtures, plumbing, heating, air conditioning and sprinkler systems.
2. Class 14.1 – 5% - which is goodwill and other Eligible Capital Property including milk and egg quotes, franchises and licenses.
3. Class 17 – 8% rate – for roads, parking lots, runways, etc.
4. Class 19 – 20% or 50% - for property acquired before end of 1966
5. Class 47 – certain transmission and distribution equipment
6. Class 51 – 6% - natural gas pipelines

New and existing business owners investing in new business assets or positioning their business for the new economy, should discuss this immediate expensing opportunity with their tax advisor.

Portions of this article are excerpted from the Special Report on the 2021 Federal Budget. For more important details and interpretations, sign up to receive Knowledge Bureau Report in your inbox and you’ll have access to download the complete report.

Additional educational resources: RSVP now for an analysis of the April 19, 2021 budget and its impact on the future of our economy and financial planning at the May 20 Virtual CE Summit.