Paul Zober Professional Corp., CPA

If you are thinking about buying a car in the near future, there are some tax perks to doing it in December rather than January if you are self-employed or have a incorporated company with a December year end. 

Normally, you can only deduct 1/2 the regular yearly depreciation in the first year. This applies whether you purchase equipment January 1 or December 31. But the Accelerated Investment Incentive (AII) was introduced for equipment purchased between November 20, 2018 to December 31, 2023. You can deduct triple the normal depreciation in the first year. (This will be phased out between 2024 and 2027.) You don’t get more depreciation in the long run, but it is accelerated.

If you are thinking of buying an electric vehicle the deal is even better. There is some fine print, of course. You have to have bought it after March 28, 2019. If it is a hybrid, it has to have battery capacity of at least 7kWh. But if you qualify on those scores, the deduction is 100% until 2023, to a maximum of $55,000 plus sales tax. From 2024 to 2025 it will be 75%, and in 2026 to 2027 it will be 50%. 

Of course, as with most things, generally equipment purchase decisions should be based on the business case first – including such issues as cash flow and the total cost of ownership – and the tax issues second. But there are some great tax incentives for purchasing equipment now rather than later.