Federal Budget Includes Computer Tax Break

The Canadian government wants you to buy computers to help the economy. This week’s budget includes a tax break for businesses who buy computer hardware and software over the next two years.

If the Budget is passed by Parliament, businesses will be able to write off 100 percent of the cost of technology purchases in the year they’re made. Previously if you made a purchase the cash went out the door, but you had to wait to write it all off as an expense (unless you leased the equipment).

So if you’re thinking about a computer hardware and software upgrade of any scale, it’ll be worth it to make sure you do it before February 2011. And don’t forget to give the receipt to your accountant!

Here’s the explanation from the Government of Canada Website (www.budget.gc.ca):

Providing Assistance to Businesses in All Sectors to Invest in Computers
Budget 2009 proposes a temporary 100-per-cent CCA rate for computer hardware and systems software acquired after January 27, 2009 and before February 1, 2011. In addition, the rule that restricts CCA deductions to one-half of the CCA write-off otherwise available in the first year will not apply to these computers.

This temporary measure will allow taxpayers to fully expense their investment in computers in one year. The measure will provide stimulus by assisting businesses to increase or accelerate investment in computers. It will also contribute to boosting Canada’s productivity through the faster adoption of newer technology. Businesses in all sectors of the economy, including the service sector, will benefit from this incentive.

It is estimated that this measure will cost $340 million in 2009–10 and $355 million in 2010–11.

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