CAPITAL ALLOWANCE SYSTEMS FOR CHEMICAL CORPORATIONS: CANADA VS. UNITED STATES

This research study, commissioned by CIAC, compares the differences in capital allowances (tax depreciation) for capital expenditures incurred by chemical corporations in Canada and the United States.  The study concluded that a comparable Canadian rate for the write-off of capital costs for manufacturing machinery and equipment (class 43) would be 45 per cent (current rate is 30 per cent), and that coverage for depreciation allowance for chemical investments in the U.S. is significantly broader than it is in Canada. The study also noted that “capital allowance deductions are generally a factor in decision-making models and affect the Net Present Value of potential investments.”