Published | Category : Income tax - businesses

Replacement of the Additional Capital Cost Allowance of 35%

The additional capital cost allowance of 35% introduced in March 2017 has been replaced by an additional capital cost allowance of 60%.

Like the 35% one, the additional capital cost allowance of 60% covers a two-year period and applies to manufacturing or processing equipment and general-purpose electronic data processing equipment.

Tax legislation will be amended to allow taxpayers to deduct, in the calculation of their business income for a taxation year, an amount corresponding to the additional capital cost allowance of 60% in respect of qualified property for that taxation year. This additional amount will be granted for the taxation year in which the qualified property is first put to use and the following year.

Qualified property

The additional capital cost allowance of 60% applies in respect of:

  • property that is a machine or equipment acquired primarily for use in the manufacturing and processing goods intended for sale or lease (property in Class 53 in Schedule B to the Regulation respecting the Taxation Act); and
  • general-purpose electronic data processing equipment and systems software for that equipment (property included in Class 50 in Schedule B to the Regulation respecting the Taxation Act).

The property must be new at the time of its acquisition and be acquired after March 27, 2018, but before April 1, 2020. Moreover, it must be:

  • put to use within a reasonable time of its acquisition;
  • used by a taxpayer mainly in the course of carrying on a business for a period of 730 consecutive days following the day it is first put to use (except in the case of loss, involuntary destruction by fire, theft or water, or a major breakdown); and
  • used mainly in Québec by the taxpayer throughout that period.

Calculating the additional capital cost allowance

The additional capital cost allowance of 60% is calculated according to the same rules as the additional capital cost allowance of 35%.

Special tax

A taxpayer that claims the additional capital cost allowance in respect of qualified property and that does not use the property mainly in the course of carrying on a business for a period of at least 730 consecutive days after the property was first put to use or that does not use the property mainly in Québec during that period may have to pay a special tax.

Additional capital cost allowance of 35%

The additional capital cost allowance of 60% replaces the additional capital cost allowance of 35%, which was eliminated on March 28, 2018.

For more information, see pages A.63 and A.66 of the Additional Information 2018-2019 (PDF – 3.73 MB) published by the Ministère des Finances.

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