Immediate Expensing of Capital Asset for CCPCs

Walter Harder

In the last federal budget, the government proposed to allow Canadian Controlled Private Corporations to claim 100% CCA in the year of acquisition for assets purchased after April 18, 2021, to a maximum of $1,500,000.  However, legislation has yet to be introduced to implement that change.  That’s turning out to be a big problem for tax advisors and their clients.  Here’s why:

This week, the T2 Guide for 2021 was released and includes the following note:

“As of December 31, 2021, the legislation for this proposed measure had not been released. The CRA will only allow these claims once the legislation is introduced.”

This will mean tax advisors must specifically point out to their clients that claims for 100% CCA made on returns for tax years ending 2021 may be disallowed or delayed until this legislation is introduced.  A decision will need to be made on whether to make the claim on filing, or adjust the return later, when legislation is passed.

It’s expected that the legislation will be included in the next federal budget, expected shortly.  This is an unfortunate example of retroactive tax law that leave taxpayers in the dark, adding to the complexity that they face in meeting compliance obligations and planning their cash flow.

This topic will be discussed in more detail at the May CE Summit, which will focus on the Federal Budget, Retirement and Estate Planning.