FALL ECONOMIC STATEMENT HIGHLIGHTS

Transcription

1 Federal Fall Economic Statement 2018

2 FALL ECONOMIC STATEMENT HIGHLIGHTS On Wednesday, November 21, 2018 the Honourable Bill Morneau, Minister of Finance, tabled the 2018 Fall Economic Statement Investing in Middle Class Jobs. This was a highly anticipated speech, as many Canadians were looking for a response to promote Canada s competitiveness. At this point in time, limited new tax measures are introduced; the highlights are detailed below: Income Tax Rates No changes were announced to personal or corporate income tax rates or thresholds. Full Expensing for Manufacturing and Processing Machinery and Equipment and Clean Energy Equipment The Fall Statement announced that machinery and equipment used in Canada for the manufacturing and processing of goods, as well as specified clean energy equipment, will be eligible for immediate expensing. Qualifying assets acquired on or after November 21, 2018 will be eligible for a full tax write-off in the year it is put in use in the business. The half-year rule will be suspended for property that is eligible for this measure. These proposals will be gradually phased out starting in 2024 and will no longer be in effect for investments put in use after Accelerated Capital Cost Allowance (CCA) Measures The government introduced an Accelerated Investment Incentive to allow businesses in Canada to deduct the cost of their investments more quickly, thus increasing the attractiveness of making capital investments. The Accelerated Investment Incentive will provide an enhanced first-year allowance for most capital property that is subject to the CCA rules. The Accelerated Investment Incentive will generally be calculated by applying the prescribed CCA rate for a class to one-and-a-half times the net addition to the class for the year (or three times the normal first-year allowance when subject to the half-year rule). The larger deduction in the first year will be offset by smaller deductions in respect of the property in future years. The Accelerated Investment Incentive will be available for eligible property that is acquired after November 20, 2018 and which becomes available for use before 2028, subject to a phase-out for property that becomes available for use after 2023.

3 Illustrative Impact of Proposed Measures on Selected Assets, Deduction in the First Year* Immediate Expensing Manufacturing and processing machinery and equipment Normal Proposed Measures 25% 100% Clean energy equipment 25% 100% Accelerated Investment Incentive Computer software 50% 100% Computers 27.50% 82.50% Trucks and tractors for hauling freight 20% 60% Motor vehicles 15% 45% Earth-moving equipment 15% 45% Data network infrastructure equipment 15% 45% Aircraft 12.50% 37.50% Office equipment 10% 30% Fibre-optic cables 6% 18% Buildings used in manufacturing and 5% 15% processing Other non-residential buildings 3% 9% Goodwill % 7.50% Other 2 Variable Up to 3x normal rate 1 Goodwill is an intangible business asset that is linked to the established reputation of a business. In practice, goodwill is the difference between the price paid to acquire a business and the value of the net assets (e.g. buildings, equipment) acquired during the sale. 2 The category "other" includes all other capital assets, including intangible capital assets, that are not presented in this table. * reproduced from the Fall Economic Statement, Department of Finance Other Measures A new refundable tax credit for qualifying news organizations was introduced and will be effective January 1, The credit will support labour costs associated with producing original news content and will generally be available to both non-profit and for-profit news organizations. A new temporary non-refundable tax credit for qualifying subscribers of Canadian eligible digital news media was also introduced. Details on the 15 percent tax credit will be provided in Budget The Mineral Exploration Tax Credit, scheduled to expire March 31, 2019, has been extended for an additional five years, until March 31, 2024.

4 ABOUT MNP MNP is a leading national accounting, tax and business consulting firm in Canada. We proudly serve and respond to the needs of our clients in the public, private and not-forprofit sectors. Through partner-led engagements, we provide a collaborative, cost-effective approach to doing business and personalized strategies to help organizations succeed across the country and around the world. Regional Tax Contacts James Kungel Vancouver Island Kevin Wong Vancouver Ryan Hoag Lower Mainland Christopher Tilbury Fraser Valley Brian Posthumus Okanagan Randy Bella Calgary Graham Heron Central Alberta Mark Bernard Edmonton Kim Drever Peace Michael Unick Lethbridge Cindy Heinrichs Cypress Jeff Henkelman North Saskatchewan Wayne Paproski South Saskatchewan Derek Innis Winnipeg Michael Poole Southern Manitoba Steve Blazino Northwest Ontario Ryan Devereux Southwest Ontario Bryan Walters South Central Ontario Jeanne Cheng Toronto North Don Carson Toronto Rosario Suppa GTA-West Gavin Miranda Ottawa Sean Sprackett Montreal Jerry Inman Atlantic Canada Service Line Leaders Am Lidder International Tax Heather Weber Indirect Tax Jay McLean SR&ED Tax Senior Vice President, Tax Am Lidder SVP, Tax Services

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