Registration - In-house Organization

Subject Matters

• Employment and Training
• Environment
• Industry
• Infrastructure
• International Trade
• Science and Technology
• Small Business
• Taxation and Finance
• Transportation

Subject Matter Details

Grant, Contribution or Other Financial Benefit

• Capital Cost Allowance (CCA) rates for freight cars C.A.R.S. welcomed the tax measure in Budget 2008 that increases the rate of depreciation for locomotives to 30% but maintains the increase must also extend to freight cars and intermodal equipment. By raising the capital cost allowance rate to 30%, railways will now be better able to modernize their locomotive fleets which will lead to increased productivity through more efficient technologies, reduced emissions, increased safety, and decreased congestion when moving people and goods throughout Canada. Canada has currently over 400 railway suppliers and employs over 80,000 workers. Implementing this recommendation means close to $300 million in new spending by the railways over five years. However, the unanimous Standing Committee on Industry, Science and Technology and the Standing Committee on Finance both recommended the rate of depreciation on rolling stock be increased to 30%. New technologies such as lighter materials for freight cars allow railways to carry greater loads, improving efficiencies and lowering its already advantageous environmental impact. Furthermore, new processes in car designs also provide greater efficiencies when loading and unloading products key to Canada´s economy. Rail is the least polluting and most capital-intensive of all modes and had the lowest CCA rate: locomotives (15 per cent); trucks (40 per cent); road trailers (30 per cent); vessels (33 per cent); and aircraft (25 per cent). U.S. rail rolling stock is fully tax depreciated after seven years, compared to what was more than 20 years in Canada.

Policies or Program

• Scientific Research and Experimental Development (SR&ED) The federal government should: • Make the tax credits refundable. The benefits of the tax credit should be extended to companies operating in Canada which, because they are either currently facing a downturn in profits, investing in R&D ahead of their earnings performance, or having to consolidate corporate earnings for foreign tax reporting purposes, are not currently able to take advantage of this important tax measure; • Exclude the tax credits from the federal revenue base; • Provide an allowance for international collaborative R&D, in recognition of the fact that a more and more innovative activity is occurring on a globally concurrent basis both within and among companies. A threshold stating that 80-90 percent of research must be conducted within Canada would allow for projects that, out of economic necessity, require parts of research to be conducted elsewhere. Allowing for research and experimental development activities that are primarily conducted in Canada could dramatically increase access to the SR&ED program for Canadian manufacturers and exporters; and, • Extend the tax credit to cover costs for patenting, prototyping, product testing, and other pre-commercialization activities that are essential in order to get new processes into operation and new products to market.

Communication Techniques

• Written communication
• Oral communication

Government Institutions

• Environment Canada
• Finance Canada (FIN)
• Industry Canada
• Transport Canada (TC)

Address:
99 Bank Street, Suite 1401
Ottawa, ON  K1P 6B9
Canada

Telephone number: 613-237-3888
Fax number: 613-237-4888