Bill-C19 Is The Largest Ever Tax Deduction

Posted By On 06 Nov 2023
Bill-C19 Tax Write-Off

New Bill-C19 Increases 2023 Tax Deduction Allowance for Equipment Purchases to 100%!

Taking the Bill-C19 tax deduction will lead to significant tax savings for companies in 2023.

Bill-C19 was released by the Canadian Department of Finance in April 2022. The legislation allows companies to expense the full price of new or used business equipment in the first year they’re purchased. For 2023, the maximum deduction is $1,500,000, meaning a business can write-off the full cost up to $1.5 million worth of acquired equipment that is purchased or financed.

The equipment must be both purchased and put into service during the 2023 calendar year, so right now is the time to contact your nearest Oaken Equipment Bobcat dealer to ensure your equipment has arrived in time for this tax year. We have lots of new equipment and used equipment in stock and you have until midnight on December 31 to acquire it, plug it in, fuel it up and start it.  

Who Can Qualify?

The good news is that even the smallest contractor buying one attachment from Oaken Equipment can expense the full cost of it in this tax year.  Most tangible business equipment and Bobcat Equipment qualify (again, both new or used), and any size private business can take the write-off.

The tax deduction is especially important this year as many companies are seeing their projections and numbers shrink as inflation and rising interest rates continue to dominate the headlines. Many contractors are coming off a record 2023 year and could use the 100% tax write-off for equipment they know they’ll need in 2024. So, taking a deduction on the entire cost of acquired equipment (as opposed to yearly depreciation) to make a very large difference to 2023’s bottom line.

Put simply, at Ontario’s 26% corporate tax rate, every $1,000 spend on new or used Bobcat equipment and attachments equals $260 in tax savings.

How Can I Use This Deduction?

Many might not be aware of is that the write-off can be taken whether the equipment was outright purchased or financed. That last part is particularly interesting since the amount of tax money saved from the deduction can very well exceed the payments made in 2023, making it a net gain for the year.

To give an example of this, consider this 3-step scenario:

Step 1: A company finances an excavator in September 2023. The total cost was $150,000. The payments of $2,700 begin in October. That would equate to three months of payments made in 2023 for a total of $8,100 (these are all rough figures for illustration purposes).

Step 2: The company then takes a Bill-C19 deduction on the machine for the full amount ($150,000). At a 26% tax rate, that equates to a net tax savings of $39,000. That $39,000 comes right off the tax bill and stays in the company’s bank account. The $39,000 in net tax savings minus the $8,100 paid out equals $30,900.

Step 3: By acquiring the equipment, the company’s 2023 is $30,900 better than it would have been had it not acquired the equipment at all. Plus, they get to use the equipment. Wow!

This is why Bill-C19 can matter so much in 2023. Yes, in this scenario, you’re taking the deduction all at once instead of spreading it out, but for most companies, money now is superior to money later. Especially in the business climate we find ourselves in.

Contact Your Tax Professional

Of course, this is not to be taken as outright tax advice. Always speak to your accountant or tax professional for what makes the most sense for your company. But even if you’ve always taken normal depreciation in the past, Bill-C19 might make more sense in 2023. Especially if the rising rates we’re seeing do tame inflation. 2024 might be looking much better than today, so again, money now is often better than money later.

Contact us today to take advantage of this tax savings!

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