Ontario proposes $8 billion tax cut on business equipment

Ontario wants businesses to deduct the full cost of new equipment from taxable income at once, not over many years. The Canadian Press reported that Finance Minister Peter Bethlenfalvy announced the $8 billion Ontario Competitiveness Tax Cut ahead of the fall economic statement due on October 29.

Today, firms deduct machinery costs gradually; immediate expensing lets them deduct the full cost in the first year and recover it sooner.

Ontario’s cut is the provincial part of Ottawa’s Productivity Mega Deduction, announced on September 15. That federal measure would raise the share of assets eligible for immediate expensing from roughly 15% to more than 65%. Both are proposals: Ontario’s write-offs start only after federal legislation passes.

Ontario estimates the cut would bring over $8 billion in tax relief over five years, at least $11 billion in extra investment and 30,000 jobs. Whether, and when, the federal legislation passes is not yet known.

Sources: Government of Ontario · Prime Minister’s Office of Canada · CP24