Immediate Expensing of Capital Property

Immediate Expensing of Capital Property

On June 23, 2022, Bill C-19 received royal assent enacting the changes to allow Canadian Controlled Private Corporations (CCPCs) to deduct 100% of capital outlays on eligible property acquired on or after April 19, 2021 for CCPCs. Eligible property includes any capital property subject to the capital cost allowance (CCA) rules except for the following CCA classes:

  • Class 1 -6 – Various building types
  • Class 14.1 – Intangibles/goodwill
  • Class 17 – Roads, parking lots, sidewalks, storage areas or similar surface construction
  • Class 47 – transmission or distribution equipment of electrical energy
  • Class 49 – property that is a pipeline, including control/monitoring devices, valves and other equipment ancillary to the pipeline for transmission of petroleum
  • Class 51 – property that is a pipeline, including control and monitoring devices, valves and other equipment ancillary to the pipeline, used for the distribution of natural gas

There is a $1.5M threshold for a corporation and its associated CCPCs per tax year. If allowable expenses exceed this limit in a tax year, the CCPC can elect which CCA asset class to apply the immediate deduction. Any remainder in excess of the limit is subject to regular CCA rules. Any unused portion of the annual $1.5M threshold is not carried forward for future tax years.

Property would be eligible for immediate expensing even if it has been used before, or acquired for use for any purpose before the acquisition by the taxpayer if the both the following conditions are met:

  1. Neither the taxpayer nor a non-arm’s length person previously owned the property; and
  2. The property has not been transferred to the taxpayer on a tax-deferred “rollover” basis

A CCPC that has already filed a tax return in which it had acquired property eligible for immediate expensing may file an amendment to increase the CCA deduction claimed in the tax year.

Property acquired by Canadian resident individuals or partnerhips where all members are individuals, after December 31, 2021 and becomes available for use before January 1, 2025 may be eligible for these rules. For partnerships, where not all members are individuals, the property must become available for use before January 1, 2024 to qualify. 

To determine if you qualify for the immediate expensing of certain assets, please contact us for more information.

Testimonial from Rob Waterman - President at Waterman Sales Ltd.

We have been in Business since 1992 and had an accountant who was a family friend. When he retired, we needed to find a new accountant. Jacob at Hendry Warren was recommended to us through our Lawyer. We met with him and were impressed immediately; over the years we have gotten to know more of the staff and are equally impressed. They have done our company taxes, company valuations, share purchases, tax planning, covid relief, personal taxes, etc. All of which have gone very smoothly. Hendry Warren is aware of new legislation and has helped us grow as a company.

Rob Waterman (President at Waterman Sales Ltd.)
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Hendry Warren is a very professional organization who are very sensitive to client needs and timelines. Marie Fraser and all of the staff that I have met and worked with exhibit the same degree of courtesy and professionalism. It is always a pleasure working with them.

Lynn LaHam ( CPA, CGA, Crossroads Children’s Centre)
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Hendry Warren LLP has been easy to work with, dependable, personable and professional and are always available when we need them. The annual audit process is efficient and timely and their staff is always knowledgeable and well prepared.

Chris Jerome, Treasurer (Habitat for Humanity – National Capital Region)
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From the partners to the new graduates, the quality of service and advice were second to none…we rely heavily on the advice we are given from both an audit and tax perspective…I know that our firm can count on Hendry Warren LLP to be accurate, timely and professional at all times.

Don Silverman (CFO Sciemetric)
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In every instance where advice or assistance has been needed it has been provided with clarity and timeliness. And with a very satisfactory outcome. Our accounting staff have always appreciated the efficiency of Hendry-Warren team assigned to our audits and review engagements. We appreciate that Hendry-Warren LLP is able to support our needs as a paperless group of companies.

Gordon Miller (President, UNIGLOBE Premiere Travel)
Testimonial from Les Bell, - CPA, CA, President, Lincoln Heights Ford Sales Ltd.

Ian Hendry is a truly responsive and responsible partner in our business and has been for over 20 years. I would (and have) recommend his services to everyone.

Les Bell, (CPA, CA, President, Lincoln Heights Ford Sales Ltd.)
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I have used Marie Fraser and her team at Hendry Warren for business, personal and special projects. Deep enough bench strength to cover anything, and small enough to pay attention.

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Jacob has been invaluable over the past 18 months in assisting with the incorporation and start-up of my new business venture. I trust Jacob's advice on complicated income tax and HST matters to allow me to focus on what is most important - my business!

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