The policy change follows the recommendations of the Commons Standing Committee on Finance and the Year 2000 Task Force, both of which recommended tax incentives to encourage year 2000 preparedness for small and medium-sized firms. Eligible property must be year 2000 compliant and acquired to replace non-compliant hardware or software acquired before 1998. A taxpayer must file with its tax return an election and a letter identifying the property, its cost and date of acquisition, and a description of the property replaced.
Special rules apply to corporate groups and partnerships with corporate members.