Pre-Budget Spotlight: CTA Asks for Urgent Action to Extend the Accelerated Investment Incentive

The Canadian Trucking Alliance (CTA) recently submitted its federal pre-budget recommendations, many of which are designed to help spur investment, support the supply chain, ensuring fair competition, and increased overall productivity.

One such measure that fits with these themes is the need to extend the Accelerated Investment Incentive (AII). This issue dates back to the 2018 Fall Economic Statement, when the Federal Government announced it would allow certain capital investments, under the Accelerated Investment Incentive (AII), to be eligible for a first-year deduction for depreciation equal to up to three times the amount that would otherwise apply in the year an asset is put in use. Before the AII, the typical asset deduction for trucks the first year was 20 per cent, which was increased to 60 per cent under this initiative.

When announced, this program was widely championed by CTA and the industry. By increasing the current first-year rate, trucking companies in Canada were given a true incentive and opportunity to make capital investments in newer equipment, which made the supply chain more productive and helped reduce its carbon footprint. Recognizing the economic importance of our sector by creating greater reinvestment opportunities for small and large operators alike has since proven to be an effective way to bolster the trucking sector’s resiliency.

However, these important measures are currently set to be phased out. The CTA is calling on the federal government to reinforce its commitment to helping the industry reinvest in the national fleet by:

  • Increasing the first-year deduction up to 80% on all trucks and trailers being acquired. This move would significantly increase the amount of new and more efficient trucking equipment being used, directly helping to reduce both GHG and NOx emissions;
  • Offer even more aggressive rates (up to 100%) on natural gas, hydrogen fuel cell and electric trucks, to promote these alternative fuel technologies;
  • Make the AII a permanent policy to continue supporting acquisition and investment in newer and greener trucking technology and to help get closer to our national climate targets.

“Given the current economic climate, this is the exact time the federal government should be looking to spur business investment,” said Jonathan Blackham, CTA Director of Policy and Public Affairs. “We think this is the kind of measure the federal government could use to help support businesses in our sector and across the economy.”

Investments in equipment and machinery across the board in Canada dropped over 15% in 2020 and in many cases spending has still not returned to pre-pandemic levels. Therefore, making these important changes is one of the surest ways the federal government can help companies turn the tide and invest, while also demonstrating its commitment to stated priorities like bolstering supply chain resiliency and the greening the national fleet.

“Even if the federal government does not agree this should be made permanent, at the very least, we’d like to see it extended for at least another three or four years,” says Blackham. “As we all know, many companies saw their investment plans put on hold, significantly altered, or outright scrapped with the onset of the pandemic in 2020. For many, these pressures, and disruptions lasted years and had a significant impact on companies’ ability to utilize the Accelerated Investment Incentive. All we are asking is for companies to have a legitimate opportunity to use this important investment incentive before it is phased out.”

CTA hopes to see the federal government move on this important issue in the upcoming federal budget. For more information on CTA’s current budget asks, visit www.cantruck.ca.

For a copy of the CTA pre-budget submission, CTA member carriers can contact their provincial trucking association.

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