Budget 2015 Extends Accelerated Capital Cost Allowance

Everybody creates budgets. Everyone plans a certain amount for the mortgage; the bills; and for afterwork, barley-based beverages.

It’s as natural as the air we breathe. The government—essentially a multibillion-dollar corporation— unveiled its latest budget amidst much hoopla and fanfare. Members of Parliament from each side of the aisle did their fair share of shouting, and when the dust settled, a budget was born.

This year’s budget is now several weeks old, and we didn’t need Nostradamus to tell us how the reaction was going fall. Conservatives love it and the other parties have expressed disappointment. Essentially par for the course.

Politics aside, there is good news for manufacturers buried inside this War and Peace-sized document. It couldn’t come at a better time, either. Manufacturing as expressed as a share of the nation’s GDP has been in decline since 2000. That’s a major manufacturing depression. It’s also depressing.

Hopefully this budget’s 10-year extension of the accelerated capital cost allowance (ACCA) will give Canadian manufacturers the ability to invest in new machinery and equipment, improving their productivity and innovation.

The real benefit of the ACCA is that it allows companies to depreciate new machines at the accelerated rate of 50 percent per year, thereby reducing taxable income in the first few years of owning the asset.

It’s a tax writeoff first introduced in the 2007 budget that has been extended several times but was due to expire at the end of 2015. This measure now gives a helping hand to those manufacturers planning to invest in equipment over the next several years.

While some may say that the budget didn’t do enough to aid the plight of manufacturing in this country, I’m sure other sectors are saying it went too far. Here are some other budget highlights from Finance Minister Joe Oliver:

  • Manufacturing accounts for more than 10 percent of our GDP, more than 60 percent of exports, and employs 1.7 million people across the country.
  • Some have questioned the role of manufacturing in Canada’s future economic success. Oliver does not. For this government, he said, the words “Made in Canada” continue to fuel pride and inspire confidence. But manufacturers must be given the tools they need to create the products—and the jobs—of the future.
  • The government also is launching the Automotive Supplier Innovation Program. This investment of $100 million over the next five years will support the auto parts industry as it meets the constantly evolving demands of automakers and consumers.
About the Author
Canadian Metalworking

Joe Thompson

Editor

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Joe Thompson has been covering the Canadian manufacturing sector for nearly two decades. He is responsible for the day-to-day editorial direction of the magazine, providing a uniquely Canadian look at the world of metal manufacturing.

An award-winning writer and graduate of the Sheridan College journalism program, he has published articles worldwide in a variety of industries, including manufacturing, pharmaceutical, medical, infrastructure, and entertainment.