AED asks Canada to adopt accelerated equipment depreciation

AED heavy equipment canada

The Associated Equipment Distributors (AED) is calling upon Canada’s federal government to consider tax incentives that would boost heavy equipment sales.

On Oct. 26, AED delivered a letter to Bill Morneau, Canada’s minister of finance encouraging the government to pursue tax policies to incentivize capital investment, such as accelerated depreciation for equipment purchases.

“We commend your government’s commitment to building roads, bridges, pipelines and other projects that facilitate economic growth and job creation,” Brian McGuire, president and CEO of AED, wrote in the letter. “While infrastructure investment is essential to a robust economy, it’s only a piece of the economic equation. Tax policy that incentivizes capital investment is a necessary component to ensure sustained growth.”

While there has always been a discrepancy between construction equipment depreciation in the United States and Canada, new tax law in the United States has widened the gap, putting Canada at a competitiveness disadvantage.

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“The United States now permits companies to immediately deduct the cost of eligible purchases as opposed to depreciating the asset over the course of several years,” McGuire said in his letter. “Levelling the playing field by permitting accelerated deprecation in Canada will result in increased competitiveness and sustained growth for the country.”

AED’s letter was sent as Morneau is considering proposals to ensure Canada’s tax code encourages growth and job creation following changes to the US tax system.

The new US tax law lowered the corporate rate and allows full and immediate expensing for new and used equipment purchases, among other reforms.

Morneau is set to deliver the fall economic statement on November 21 in Ottawa, which could include specifics about tax policy changes the government will pursue.

AED believes that infrastructure funding paired with tax policy that incentivizes capital investment will result in substantial economic growth for the Canadian economy.

“Combining accelerated depreciation with substantial infrastructure investment would be powerful medicine to bolster the Canadian construction, distribution, and manufacturing sectors and put the economy on track for years of prosperity,” McGuire wrote.