As part of its plan to continue to stimulate the Canadian manufacturing sector, the Federal Government proposes to extend certain incentives related to the acquisition of machinery and equipment. Currently, machinery and equipment acquired by a taxpayer, after March 18, 2007 and before 2012, primarily for use in Canada for the manufacturing or processing of goods for sale or lease is eligible for a temporary accelerated capital cost allowance (“CCA”) at a rate of 50% on a straight line basis (subject to the application of the “half-year rule”) under Class 29. The Budget proposes to extend this temporary incentive for two years to eligible machinery and equipment acquired before 2014.

Machinery and equipment acquired by a taxpayer after 2013, primarily for use in Canada for the manufacturing or processing of goods for sale or lease will be required to be included in Class 43 for which a 30% declining balance CCA rate applies