Fall 2018 Federal Economic Statement

On November 21, 2018, the Honourable Bill Morneau presented the Federal government’s 2018 Fall Economic Statement. In the 2018 Federal Budget, the government stated that they would conduct a detailed analysis of U.S. tax reform to assess any potential impacts on Canada.

Summary of New Tax Measures

• ·  Enhanced CCA rate of 100% for new purchases of Manufacturing and Processing (“M&P”) equipment and certain new “Green” technology equipment. This provides a full deduction for M&P and certain “Green” technology equipment where the asset is available for use before 2024;
• ·  Increases the first-year deduction for other new depreciable property purchases. This proposal will temporarily suspend the half year rule for new acquisitions and increase the first year Capital Cost Allowance deduction. New acquisitions will be eligible for 3 times the tax deduction in the year of acquisition than they would be eligible for under the existing rules;
• ·  Support for news organizations (access to charitable tax incentives for eligible news organizations, a new refundable tax credit to support news organizations and a new non- refundable tax credit for subscriptions to Canadian digital news media); and
• ·  No corporate or personal rate reductions.These measures will only provide a slight increase to the amount that corporations may deduct from taxable income for the purchase of new depreciable property. Only purchases of M&P and “Green” technology equipment will receive a 100% deduction.One could question how these measures are a response to the U.S. tax reforms of 2017. Will these changes allow Canada to be competitive on a global scale?

For more information regarding tax accounting, auditing and tax services, contact the professional accounting team at Hogg, Shain & Scheck.