Depreciation Differences Between Canada and the U.S. in Business Acquisitions
One of the biggest hidden differences Canadian buyers face when acquiring a U.S. business is how depreciation is treated across the two tax systems. This difference directly impacts the value of an asset purchase versus a stock purchase. How Depreciation Works in Canada In Canada: This creates a predictable but slower tax deduction system. How Depreciation Works in the United States In the U.S.: This can significantly impact early-year tax liability. Why This Matters in Acquisitions for Your E-2 or L-1 Visa When a business is purchased: This creates a timing advantage that is often missed by foreign buyers. The Planning Gap Canadian buyers often evaluate acquisitions using Canadian tax logic, where: This leads to undervaluing U.S. tax benefits tied to asset purchases. Key Takeaway Understanding depreciation differences between Canada and the U.S. is essential when evaluating acquisition structure, because timing of deductions can materially change after-tax returns.