Here’s some good news for Canadian manufacturers: the government recently announced the Accelerated Capital Cost Allowance Program has been extended by two years.

This tax provision enables companies to plan ahead when making the decision to invest capital in their business and helps manufacturers write off eligible purchases faster. Companies can invest that much sooner in new equipment, improvements and upgrades to machinery.

First introduced in 2007 in response to ongoing global economic challenges, the ACCA Program provides companies with the support they need to retool and remain competitive. Over 25,000 businesses in Canada have used the program to purchase new machinery and many credit  the measure for helping them expand.

What the experts say:
Finance Minister Jim Flaherty says of the extended program: “It matters and works for manufacturers and processors in Canada. It makes our business more competitive which is very important in the world market.”

The Canadian Manufacturers & Exporters association has identified support for investment in capital equipment and technologies as the top priority to increase efficiency and improve productivity.  President and CEO Jayson Myers says that the tax measures, “not only make Canadian manufacturers more cost competitive, but their future is going to depend on the investments they make in new products, new markets and new technology.”

The utilization of the CCA program enables companies to plan and invest, and helps create jobs in a sector that was particularly hard hit by the global recession.

Real production advantages
Companies not aware of this two year extension may put off purchasing new equipment or spending on improving or upgrading machinery, hampering productivity and competitiveness.

Every year there’s new research and development of machine tools and they are continually being improved and upgraded.  Machinery becomes more technically sophisticated, enabling equipment to run better, smoother and faster.  When purchasing up-to-date equipment, or upgrading current machinery, companies leverage the latest technology available to them. This helps reduce operating costs and enables businesses to be more productive and competitive.

Innovation key to higher productivity
Machinery and equipment investment helps foster innovation often resulting in the creation of new products and production processes.  This translates to higher productivity and competitiveness, and can result in increased profits and overall success for manufacturing companies.

The investment-prosperity connection
Statistics bear out the investment-prosperity connection as long term data collection demonstrates a strong positive correlation between investment in machinery and equipment and labour productivity.

Companies that invest in new machinery and equipment provide their workers with the latest technologies. This allows them to not only increase production capacities, but also to produce higher-quality goods and services more quickly. The result? Businesses stabilize their costs and increase their outputs - key elements in overall business success and long-term prosperity.

Long term benefits

The extension of the accelerated capital cost allowance for two additional years will help Canada’s manufacturing companies to accelerate and undertake additional investment in advanced machinery and equipment. Adopting new and innovative technologies to increase productivity will allow manufacturing businesses in Canada to stay competitive and meet current economic challenges. This will contribute to improving their long-term prospects and will help them to compete globally while creating jobs and growth in all parts of Canada.

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