Introduced in 2021, this incentive allows for eligible businesses to claim depreciation more aggressively on eligible capital property. The goal is to encourage the growth of small businesses in Canada by providing a method of reducing taxable income.
How is this accomplished?
Depreciation reduces taxable income and thereby, usually the associated tax owing. It is a method of expensing a capital asset over time. For example, if you purchased kitchen equipment for $1000 and would normally claim $20 in depreciation the first year based on the normal tax rules, you may now be able to claim an increased amount. Properties that qualify must be purchased after April 18, 2021 for Canadian Controlled Private Corporations, after December 31, 2021 for individuals and partnerships, and be available for use before January 1, 2024.
How do you make a claim?
You must identify the capital property that you want to claim the immediate expensing on in your tax return.
How can I find out more about this?
Speak to your tax advisor. There are a few additional rules that you will want to understand before making the claim and it could reduce your taxes payable.
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