Government and regulatory
Feds to triple depreciation rate for rental equipment
In its 2018 fall economic statement, the federal government has announced its intention to triple the depreciation allowed in the first year that a business puts capital investments into use. The change applies to a wide range of capital assets, including buildings, computers and construction equipment. In an example provided in the statement, the allowed first-year depreciation on earth moving equipment would move from 15 to 45 percent.
By Patrick Flannery
The Canadian Rental Association has released the following statement in reaction to the announcement:
The Government of Canada has released its Fall Economic Statement. This year’s update contains a proposal that would allow rental operators to kick-start the depreciation write-down of all rental assets. Reacting to the success of the United States incentivizing business to make capital investments, Finance Minister Bill Morneau introduced similar measures in his Fall Economic Statement. The new measure will be called Accelerated Investment Incentive and will apply only to the first year of depreciation. This temporary Accelerated Investment Incentive will apply to all qualifying equipment, vehicles, software, computers, and other capital investments that are acquired after November 20, 2018. It will be gradually phased out starting in 2024, and no longer in effect for investments put in use after 2027.
“In our competitive environment this announcement will encourage rental operators throughout Canada to invest in modernizing their rental fleets,” said Mike Maltby, President of the Canadian Rental Association. “And this will allow members to continue to meet the needs of our customers for many years to come.”
The Accelerated Investment Incentive and other recommendations of the Fall Economic Statement are expected to take effect in early 2019.