What's new with Sage Fixed Assets 2019.1 for Canadian Tax Legislation

Sage Fixed Assets 2019.1 Release

The Accelerated Investment Incentive (AII) for Capital Cost Allowances (CCA) and full CCA write-offs for manufacturing and process property and eligible clean energy property were introduced in the fall of 2018 by the Canadian Minister of Finance, Bill Morneau. These tax initiatives represent major changes to the CCA calculation for assets acquired after November 20, 2018.

Status of Support for the Changes in Sage Fixed Assets (Update May 2019)

The Sage Fixed Assets 2019.1 Tax Update, released in January of 2019, does not reflect these legislative changes in the T2S(8) Manager and are not planned for a future release of Sage Fixed Assets. The T2S(8) manager will continue to calculate tax depreciation using the CCA rates in place before the November 2018 changes. In addition, the optional Tax Class drop list of CCA classifications will continue to be available for assigning tax classes to existing and new assets.

Background on the CCA Changes

The Accelerated Investment Incentive

The Accelerated Investment Incentive (AII) will accelerate the amount of CCA taken for all assets already eligible for CCA that are acquired after November 20, 2018 and become available for use before 2028.

1. There will be two significant changes to the first-year calculation.
   • In the first year that an asset is available for use, the CCA will 1.5 times what normally would be allowed. 
   • The half-year rule will be temporarily suspended for qualifying classes of assets.
2. Essentially these two changes can result in the CCA deduction for qualifying assets being 3 times what is normally allowed (2 times because of the half-year rule suspension and 1.5 times that CCA form the acceleration).
3. The CCA in subsequent years will be computed normally. 
4. There are phase-out rules for property that becomes available for use after 2023.
   • The half-year rule will still be suspended for qualifying classes of assets. 
   • The accelerated CCA rate of 1.5 will no longer be available for assets subject to the half-year rule. 
   • For an asset that is in a class not subject to the half-year rule, the accelerated CCA will be 1.25 times the normal CCA amount for the first year during the phase-out period. 

Full Expensing of M&P and Clean Energy Equipment

1. Manufacturing and processing equipment (class 53) and various types of clean energy equipment (classes 43.1 and 43.2) acquired after November 20, 2018 and before 2024 are eligible for a 100% CCA deduction. 
   • Equipment acquire in 2024 through 2025 will drop to a CCA first-year deduction of 75%.
   • Equipment acquired in 2026 will drop to a CCA first–year deduction of 55%. 
   • CCA amounts will return to normal treatment for assets acquired after 2027.