Suppose you own a commercial building valued at $1,000,000.
Under the current rules, you might be claiming depreciation at a rate of 2% per annum, equating to a $20,000 deduction from your taxable income.
At a corporate tax rate of 28%, this deduction could save you $5,600 in taxes each year. Without the ability to claim this depreciation, your tax bill would increase by this amount annually.
Furthermore, the removal of depreciation deductions may compel property owners to increase rents to cover the additional tax costs. This could place a strain on businesses that lease these spaces.
However, note that depreciation on commercial buildings is a tax deferral scheme. When you sell the building and make a gain, the depreciation is claimed back as depreciation recovery which is taxable.