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Accelerated capital cost allowances effectively allow companies to immediately write off investments in assets like machinery and equipment. In Canada such write-offs are currently spread out over several years.

Business lobby groups have for months been calling on Ottawa to introduce some form of tax relief in its fall economic update, arguing that Canadian companies are increasingly at a disadvantage to U.S. firms. They say Canada’s overly burdensome tax system and confusing regulatory regime have led to waning investment levels in the country, and have called for a number of broad overhauls to correct the imbalance.

There’s a package of reforms that need to occur to make oilsands and conventional oil and gas competitive in Canada

“In the event government does not introduce 100-per-cent deductibility, then they need to make that up in other areas,” said Ben Brunnen, a vice-president at the Canadian Association of Petroleum Producers.

CAPP said those secondary measures could include certain shelters from carbon taxes, better market access for oil and gas producers, clearer regulatory guidelines and lower corporate tax rates, among other things.

“There’s a package of reforms that need to occur to make oilsands and conventional oil and gas competitive in Canada,” Brunnen said.

Photo by Chris Young/The Canadian Press

Dan Kelly, head of the Canadian Federation of Independent Business, which represents over 100,000 small and medium sized companies, is hoping Ottawa will introduce a long-term plan to match U.S. tax reforms. He said the business community does not expect Morneau to immediately match the U.S. on accelerated capital cost allowances, but said even a gradual shift would placate business owners.