Introduced in Canada’s 2018 federal fall economic statement, the Accelerated Investment Incentive provides an enhanced capital cost allowance (CCA) on equipment purchases. Full expensing in the first year for manufacturing and processing (M&P) and clean energy equipment purchases was also introduced as part of the Accelerated Investment Incentive.
How it works
The Accelerated Investment Incentive allows investors to write off a larger share of the costs of newly acquired capital assets in the year the investment is made or the asset becomes available for use. This measure involves:
- A 50% increase in the available CCA deduction for property* acquired after November 20, 2018 that becomes available for use before 2024.
- The suspension of the existing CCA half-year rule in respect of property acquired after 20 November 2018 that becomes available for use before 2028.
This incentive applies to property for which CCA is calculated on a declining-balance basis, as well as for classes of property with straight-line depreciation or classes for which depreciation is based on unit of use. Property that becomes available for use after 2027 is not eligible for the Accelerated Investment Incentive.
* calculated on the net capital cost addition to a class
100%
First-year CCA on M&P machinery and equipment investments
100%
First-year CCA on clean energy equipment investments
Manufacturing and Processing (M&P) Investments
Amendments to the current allowance rules on M&P investments temporarily allow for full expensing of M&P machinery and equipment.
| Year of purchase/Available for use | Current first-year allowance (half-year rule) | Proposed first-year enhanced allowance |
| Implementation – 2023 | 25 | 100 |
| 2024 – 2025 | 25 | 75 |
| 2026 – 2027 | 15 | 55 |
Clean energy investments
Amendments to the current allowance rules on clean energy equipment included in Class 43.1 or 43.2 temporarily allow for full expensing of clean energy equipment.
| Year of purchase/Available for use | Current first-year allowance (half-year rule) for class 43.1 | Current first-year allowance (half-year rule) for class 43.2 | Proposed first-year enhanced allowance |
| Implementation – 2023 | 15 | 25 | 100 |
| 2024 | 15 | 25 | 75 |
| 2025 | 15 | N/A | 75 |
| 2026-2027 | 15 | N/A | 55 |
For more information about the Accelerated Investment Incentive, click here.