Accelerated Investment Incentive Property (AIIP)

Definition

Accelerated Investment Incentive Property (AIIP) is a temporary CCA regime introduced in the 2018 Fall Economic Statement. For qualifying property, the half-year rule is suspended and the first-year CCA is increased to 1.5× the normal declining-balance amount. The policy was designed to encourage business investment. AIIP is phasing out: full 1.5× treatment applied to property available for use before 2024, a reduced enhancement applies from 2024 to the end of 2026, and the program concludes at the end of 2027 (confirm final 2026 and 2027 regulations annually, as phase-out percentages are set in Regulations 1100(2.02)).

Key rules

• To be AIIP, the property must (per Regulations 1104(4)):
  • Be acquired after November 20, 2018.
  • Be new to the taxpayer (or acquired from an arm's-length person who never used it, or never claimed CCA).
  • Become available for use before 2028.
  • Not be excluded property (property previously owned or used by the taxpayer or a non-arm's-length person, and property that was deductible under immediate expensing or the manufacturing and processing 100% rule, which are separate incentives).
• Phase-out schedule as originally enacted (confirm current Regulation 1100(2.02) for each class before filing):

• Specific manufacturing and processing (class 53) and clean-energy (classes 43.1, 43.2) assets received a separate 100% first-year deduction; that sub-regime also phases out on the same schedule.
• Short tax years still pro-rate the enhanced CCA by days over 365.
• Recapture and terminal loss rules continue to apply normally.

Example

A BC corporation buys a $20,000 server in March 2026 that qualifies as AIIP in class 50 (55% rate). It is the only class 50 asset.

1. Under normal rules with the half-year rule: CCA = ($20,000 × 50%) × 55% = $5,500.
2. Under 2026 AIIP (1.25× enhancement, no half-year rule): CCA = $20,000 × 55% × 1.25 = $13,750.
3. Closing UCC = $20,000 − $13,750 = $6,250.
4. In year 2, CCA = $6,250 × 55% = $3,437.50 (ordinary declining balance).

The front-loaded deduction reduces 2026 tax payable, accepting lower deductions in later years.

Common mistakes

• Claiming AIIP on a used asset acquired from a related party. AIIP requires "new" to the taxpayer in the sense of s.1104(4), with limited exceptions.
• Layering AIIP on top of the half-year rule. AIIP replaces the half-year rule for the first year; do not reduce the base by 50% and then multiply by 1.25.
• Applying AIIP to property that also qualifies for immediate expensing. A CCPC can only claim one of the incentives; immediate expensing is usually more valuable if the $1.5M cap applies.
• Using an outdated phase-out percentage. Check Regulation 1100(2.02) for each available-for-use year.
• Including AIIP property that became available for use after December 31, 2027.

Related concepts

AIIP is a temporary override to the half-year rule. It interacts with immediate expensing (CCPCs choose between them for overlapping property) and affects the CCA computation for every class, including Class 50 and Class 8. See CCA overview for the mechanics.