Tax change: Depreciable purchases written-off faster.

[SASKFARMER3]

This past fall the federal government introduced the Accelerated Investment Incentive, giving Canadian businesses the ability to write off capital expenditures faster. Encased in its 2018 Fall Economic Statement, this incentive allows farmers and other businesses more depreciation in the year an asset is purchased … a lot more.

Wow now, wouldn't it be nice if the shit was priced at the half million and down club?

Got a quote and the starting number before deductions on a quad track had a $900.000.00.

Am I missing something here?

Oh well, it's a plus 77 today so have a great day.

Looks like the snow event is north of 16 highway. Ah, they through the dart wrong again.

[SASKFARMER3]

Different incentives apply for three categories of capital assets, Manufacturing and Processing investments (M&P), Clean Energy investments and other capital investments or non-M&P.

The incentives for M&P and non-M&P equipment purchases differ and have quite detailed requirements so ask your accountant about them before you pour concrete or go buy some shiny paint.

For M&P equipment bought after November 20, 2018 and available for use before 2024, the tax deduction available in the year of purchase will be 100 per cent of the cost. The write-off in the year of purchase is 75 per cent of the cost for the years 2024 and 2025, and 55 per cent of the cost for years of 2026 and 2027.

[SASKFARMER3]

For most farmers, most equipment purchases will be non-M&P since under the federal income tax rules, farms are not considered manufacturing or processing. The incentive for these purchases is three times the normal tax deduction through additional CCA in the year of acquisition, when available.
n other words, if you buy equipment available to use after November 20, 2018 and before the year 2024 you can write off three times the normal tax deduction. Property acquired and available for use after 2023 and before 2028 will be eligible for enhanced CCA of only two times the normal previous tax deduction.

For example, if you purchased and took possession of an airseeder for $100,000 under the accelerated investment incentive, you would be able to write-off $30,000 in the year of purchase. Before the new incentive, your normal tax write-off in the year of purchase would be $10,000. You’d get this enhanced write-off if you bought it before the year 2024, but if you purchased the same airseeder in the next three years, the write off in the year of purchase would be less, only $20,000.

The Fall Economic Statement included the following example. If a grain farm renews its entire fleet of aging tractors and combine harvesters, and spends $2 million, the farm will be able to deduct $900,000 for tax purposes in the first year the equipment is used. Previously, the farm would have only had $300,000 in CCA without the Accelerated Investment Incentive. For the farm, the net result would be about $160,000 in federal-provincial tax savings.

The farmer will benefit from the Accelerated Investment Incentive plus the increased efficiency and potentially the lower operating costs from the technological advances incorporated into the new equipment. However, this might also mean taking on too much machinery debt at the wrong time.

It’s always smart to plan your capital asset acquisitions and how it will impact your farm’s finances. This new incentive makes it an excellent time to review how your asset replacement strategy impacts on your farm’s taxes.

Before you buy or build, talk with your accountant and lenders about your farm’s working capital and debt/equity ratio.

[MBgrower]

Lets not be naive, equipment manufactures will increase the price of new farm machinery as a result of these tax changes because they know farmers will be lining up out the door to take advantage of these tax changes.

[walterm]

Lets not be naive, equipment manufactures will increase the price of new farm machinery as a result of these tax changes because they know farmers will be lining up out the door to take advantage of these tax changes.

Yep will be a sales promotion for them. And farmers will fall for it. Just like a rebate program, you over pay us and we will give you some of it back.

[bucket]

The last time a canadian government did something like this guys would tell the dealer to inflate the price of the new equipment to get the tax credit.....the farmer was only paying the difference so it didn't matter...the used stuff followed in price...

Thats not happening this time....


But dealers and manufacturers will gladly inflate the price more....and leave the trade in at RBA pricing....

[furrowtickler]

Not sure if it even matters anymore . Any new equipment is so far out of reach it’s unaffordable anyway .

[farmaholic]

Who the **** buys equipment for a tax write off these days? If you do you better change the farm structure and make those purchases based on need and not tax savings.

Anyone who thinks the "equipmemt flippers" are doing it for tax reasons better think again. It more likely has everything to do with financing and warranty and lease payments...

[Rareearth]

So only new equipment.
If any equipment, you could accelerate the dep. rate, then then affordability to modernize and accelerate efficiencies would also improve. Implementing across all ages would create a balanced market place. The current plan is short sighted, and creates imbalance and even unfair market place from manufacturers to dealers to the farmers along with every other business tied to Ag

[AlbertaFarmer5]

I thought everyone leased new equipment? Will this be the end of leasing?

Does 30% in year one really represent actual depreciation, or will some end up having a capital gain when they sell the used equipment since it depreciated on paper faster than in reality?