Did You Know

Application of the Accelerated Investment Incentive

AI applies to both property where CCA is calculated on the declining balance method and property where CCA is calculated using straight-line depreciation. AI will not affect the deduction available for straight-line depreciation properties in future years until UCC is nil.

Example Assuming an asset is being depreciated straight-line over 5 years (20% each year), AI would have the following impact:

Year 1 - CCA claimed 30% (20% X 1.5)

Year 2 - CCA claimed 20%

Year 3 - CCA claimed 20%

Year 4 - CCA claimed 20%

Year 5 - CCA claimed 10%

Where the assets are depreciated using the declining balance method, additions of eligible property will not be subject to the half-year rule and net additions of eligible property will be subject to 1.5 times the rate for the CCA class. As can be seen in Exhibit 5.2, net additions of eligible property are calculated as follows:

Net additions of eligible property = Additions of eligible property - (Dispositions -

Additions of non-eligible property)

It is worth noting that additions of non-eligible property continue to be subject to the half-year rule and normal rate for the CCA class.

Accelerated Investment Incentive Phase-Out

The accelerated investment incentive applies to eligible property available for use between November 20, 2018, and before 2028. However, the incentive begins to phase out for eligible property available for use between 2024-2027. The impact of the phase-out is dependent on the features of the CCA class and is summarized in the table below.