Thursday, April 26, 2007  

                     Last March the federal government passed a new budget. Part of this budget was a change in
                     the capital cost allowance for manufactures. This is a temporary incentive for manufacturing and
                     processing machinery and equipment. The budget proposed to temporarily increase the capital
                     cost allowance from 30% to a 50% straight line deduction. The increase will apply on machinery
                     or equipment purchased on or after March 19 2007 and before 2009. The half year rule will still
                     apply.               

                     Examples on 500,000 purchase a 30% deduction.

                     First year 15% 500,000               75,000 deduction

                     Second year 30% of 425,000      127,500

                     Third year 30% of                        89,250

                     Total deduction                          321,750

                     Example on 500,000 purchase 50% deduction

                     First year 25% of 500,000         125,000 deduction

                     Second year 50% of 500,000     250,000

                     Third year balance                     125,000

                     Total right off                             500,000

                     Gary McIntyre

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