The 2021 Federal Budget brought in rules that allowed individuals, partnerships, or private corporations to entirely write off asset additions (some types of assets, such as buildings, were excluded) in the year of acquisition, unlike in previous years where depreciating assets could only be deducted at a specific percentage per year.
To take advantage of the generous deductions, the assets must be available for corporations before January 1, 2024, and before January 1, 2025, for individuals and certain partnerships.
After January 1, 2024, you may only deduct 30% in year one and 20% of the remaining undepreciated balance each year after.
For example, the tax savings on a $100,000 piece of equipment before January 1, 2024, would be $11,000 under the $500,000 Small Business Deduction (“SBD”), $27,000 if over.
After January 1, 2024, those savings are spread over many years:
| SBD | No SBD | ||
| 2024 | $3,300 | $8,100 | |
| 2025 | $1,540 | $3,780 | |
| 2026 | $1,232 | $3,024 | |
| 2027 | $986 | $2,419 | |
| 2028 | $788 | $1,935 | |
| Future years | $3,154 | $7,741 | |
| Total | $11,000 | $27,000 |
If you are contemplating any significant clinic renovations or asset additions, ensure you can acquire as much as possible before the end of the year to get the enhanced deduction.
