The 2024 Federal Fall Economic Update introduced several key business tax changes. One of the most significant changes is the enhancement of the Scientific Research and Experimental Development (SR&ED) tax incentive program. The update proposes increasing the annual expenditure limit for Canadian-controlled private corporations from $3 million to $4.5 million, and raising the prior-year taxable capital phase-out thresholds. Additionally, the enhanced refundable credit will now be extended to Canadian public corporations.
The update also reinstates the Accelerated Investment Incentive and Immediate Expensing measures for certain property, aiming to boost business investment and innovation. The Accelerated Investment Incentive is designed to encourage businesses to invest in Canada by allowing them to deduct a larger portion of the cost of newly acquired assets in the year they are purchased. Specifically, businesses can claim an additional first-year depreciation of 50% on the cost of eligible assets, on top of the existing capital cost allowance (CCA) rules. This measure aims to stimulate economic growth by making it more financially attractive for companies to invest in new machinery, equipment, and buildings, ultimately fostering job creation and innovation. The Accelerated Investment Incentive is set to take effect on January 1, 2025. This means businesses can start benefiting from the enhanced first-year depreciation from the beginning of the new year.
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