CDA Essentials 2018 • Volume 6 • Issue 1

15 Issue 1 | 2019 | CDA at W ork An accelerated capital cost allowance, termed the Accelerated Investment Incentive, became effective November 20, 2018 and was described as follows: • Introducing the Accelerated Investment Incentive, an accelerated capital cost allowance (i.e., larger deduction for depreciation) for businesses of all sizes, across all sectors of the economy, that are making capital investments. The Accelerated Investment Incentive will help to encourage investment in Canada, providing a timely boost to investor confidence. According to Eugene Chu, a charted professional accountant in Toronto, the change means that dentists now get tax write-offs sooner for dental equipment purchases, lease holds, or other investments in a practice. “Before these changes came in to effect, if you bought a dental chair for $30,000, you could claim 10%, or $3,000, of that cost in tax write-offs in the first year, which is the depreciation rate,” he explains. “But now with the tax changes announced in the fall, there is a larger deduction for depreciation—three times greater—so you can write-off up to 30%, or $9,000, in the first year. The normal depreciation rate applies for the following years.” a FinanceMinister Bill Morneau identified several new tax measures in the Liberal government’s 2018 Fall Economic Statement, including incentives for greater investment in capital through an accelerated capital cost allowance. New TaxMeasures Could Benefit Canadian Dentists Making changes to the capital cost allowance has been a focus of CDA’s advocacy efforts over the past four years; for dentists, the recent tax change creates incentives for investing in their practices, which incur significant capital costs. Visit CDA Oasis to learn more about the Fall Economic Statement and its implications for dentists: wp.me/p2Lv6A-6j1 Impact of U.S. Tax Reform on American Dentists Working in Canada According to Kevyn Nightingale, partner in international taxation at MNP, a leading national accounting, tax and business consulting firm in Canada, the main goal of the legislation was to reduce incentives for American businesses to operate outside the United States. But the changes have an unexpected, adverse effect on the way Americans living in Canada, particularly those who own shares in Canadian corporations, are taxed. “Over the past few years, the U.S. has increased its ability to find out where Americans reside, where their money is, and how much money they have, and their ability to claw into your wallet has also increased dramatically over the past few years,” says Mr. Nightingale. “For example, if you’re a U.S. citizen and control your own corporation in Canada, such as a dental professional corporation, under new rules in the Tax Cuts and Jobs Act, you may be paying a lot more tax than you thought you were going to pay.” a Changes to U.S. tax law enacted in December 2017, informally known as the Tax Cuts and Jobs Act, have an impact on dentists and other professionals who are U.S. citizens working in Canada. To learn more about these issues, watch an interview with Mr. Nightingale on CDA Oasis: wp.me/p2Lv6A-6hF