Canada’s Economic Action Plan and your next computer

Just a reminder that through Canada’s Economic Action Plan, the federal government is helping businesses in all sectors of the economy by providing a temporary 100-percent capital cost allowance (CCA) rate on new computer hardware and systems software acquired after January 27, 2009, and before February 1, 2011. This initiative will cost an estimated $340 million in 2009-2010 and $355 million in 2010-2011. 

About The Initiative

The CCA system determines how much of the cost of a capital asset, such as a new computer, a business may deduct each year for tax purposes. The temporary 100-percent CCA rate on new computer hardware and systems software will encourage and assist businesses to increase or accelerate investment in computers. This will help boost Canada’s productivity through the faster adoption of newer technology.

How It Works

The regular CCA rate on computer hardware and systems software is 55 percent, subject to the half-year rule that restricts CCA deductions to one half of the CCA deductions otherwise available in the first year. The new temporary 100-percent CCA rate will allow businesses to fully deduct the cost of eligible computers in just one year because the half-year rule will not apply. 

New general-purpose electronic data processing equipment and systems software that are acquired by a taxpayer for use in a business in Canada are eligible. This includes ancillary data processing equipment and systems software. 

More information on the temporary 100% CCA rate for new computer equipment is available online.