Economic update: tax measures to stimulate investments in businesses


To further support news journalism in Canada, the federal government intends to introduce a new refundable tax credit in 2019 for news organizations in support of labour costs associated with producing original news content.

Bill Morneau, Canada's Minister of Finance, has tabled his government's economic and budget update on November 21, 2018. It contains new, targeted fiscal measures aimed mainly at stimulating investment in businesses and for the print news media.

Accelerated Investment Incentive
The federal government is proposing a temporary Accelerated Investment Incentive that will allow businesses to deduct the costs of assets acquired after November 20, 2018, more rapidly. 

Increased deduction will suspend the half-year rule; the allowance will generally be calculated by applying the prescribed capital cost allowance (CCA) rate for a class to one-and-a-half times the net addition to the class for the year, which generally equals three times the half rate.

Example
Under the current rules, a property in Class 8 with a prescribed rate of 20% would be eligible for CCA of 10% of the cost of the property in the year it becomes available for use due to the half-year rule. Under the Accelerated Investment Incentive, the business could claim CCA of 30% of the cost for the first year. 

The increased deduction will not change the total CCA that can be deducted over the life of a property--the larger deduction taken in the first year will eventually be offset by smaller deductions in future years.

The Accelerated Investment Incentive will apply to all tangible capital assets, including buildings, and to intangible capital assets such as patents. It will not apply to manufacturing and processing machinery and equipment or clean energy equipment, which will instead be eligible for other specific measures.*

It will be phased out gradually for property that becomes available for use after 2023, and will be completely eliminated for property that becomes available for use after 2027.


Tax Incentives for Eligible News Organizations
The federal government intends to introduce a new category of qualified donees for some non-profit journalism organizations, which would be able to issue official charitable donation receipts. 

More information about this measure will be presented in the 2019 budget.

New Refundable Tax Credit for News Organizations
To further support news journalism in Canada, the federal government intends to introduce a new refundable tax credit in 2019 for news organizations in support of labour costs associated with producing original news content.

This tax credit will generally be available to qualifying non-profit and for-profit news organizations. More information about this measure will be presented in the 2019 budget.


New Non-Refundable Tax Credit for Subscriptions to Canadian Digital News Media
To support Canadian digital news media organizations in achieving a more financially sustainable business model, the federal government intends to introduce a new temporary, non-refundable 15% tax credit for qualifying subscribers of eligible digital news media. 

More information about this measure will be presented in the 2019 budget.


*Accelerated CCA for manufacturing and processing equipment (Class 53) and for clean energy equipment (Classes 43.1 and 43.2)
The federal government proposes an enhanced first-year CCA at a rate of 100% for Class 43.1, 43.2 and 53 property acquired after November 20, 2018, that becomes available for use before 2024. The rate will drop to 75% for property that becomes available for use in 2024 and 2025, and then to 55% in 2026 and 2027. The increased deduction will be phased out completely for property that becomes available for use after 2027. The half-year rule will be suspended for eligible property.

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