Canada announced a new tax incentive on September 15, 2026, that could change when businesses deduct the cost of equipment and other major purchases. The headline is a 100% write-off. That sounds substantial, but it raises an obvious question: does the government pay for your purchase, or does your business simply get a tax deduction sooner?
The announcement is not limited to manufacturers or enormous corporations. A small service business buying qualifying equipment may be affected too. However, some purchases are excluded, some were already eligible for accelerated deductions, and the measure has not yet been enacted into law.
TL;DR
On September 15, the federal government proposed the Productivity Mega Deduction, which would let businesses deduct the full cost of most eligible depreciable assets in the tax year they become available for use. The proposed acquisition date starts September 15, 2026, and the measure is intended to be permanent. It is not a grant or a 100% tax refund. Buildings, certain vehicles and some intangible assets are excluded, and businesses must check the rules for their particular purchases.
What did the government actually announce?
Prime Minister Mark Carney announced the measure at the Canada Investment Summit in Toronto on September 15, 2026. The summit covered investment across the economy, not manufacturing alone. The federal government’s official Productivity Mega Deduction backgrounder says the proposal would permanently allow immediate expensing for most depreciable property acquired on or after that date.
Immediate expensing means deducting the qualifying capital cost in the tax year an asset becomes available for use. Under ordinary capital cost allowance rules, often shortened to CCA, a business deducts the cost of an eligible long-lived asset over several years. The new measure would allow much more of that cost to be deducted at once.
The government says earlier immediate-expensing measures covered roughly 15% of capital investment, while the expanded proposal would cover about two-thirds. Those figures describe the mix of investment assets across the economy, not a guarantee that two-thirds of every individual company’s purchases qualify.
Is this available to small businesses?
Potentially, yes. The government’s announced rules do not set a general minimum number of employees, minimum sales figure or minimum purchase value. The main questions are what the business bought, whether it is depreciable property in an eligible class, when it was acquired, and when it became available for use.
Consider a cleaning business buying a commercial floor-cleaning machine, a landscaping company buying equipment, a restaurant buying a commercial oven, or a professional firm replacing office furniture. Those purchases may involve depreciable business assets that fall within the broad proposal. They still need to be classified correctly. A small business does not qualify simply because it calls something equipment, and a large company does not automatically qualify for every investment it makes.
Corporations are not the only business structures addressed by the proposal. Individuals operating businesses and partnerships may also be affected, but the government specifically proposes restrictions that prevent individuals and partnerships with individual members from using immediate expensing to create or increase a loss. Businesses with little or no taxable income may not realize an immediate cash-tax benefit.
What kinds of purchases could qualify?
The proposal covers most property that would normally be depreciated under the CCA system, with specified exclusions. Here are recognizable examples. These are examples of potentially eligible assets, not blanket approvals for every product in each category.
| Purchase | What to know |
|---|---|
| Commercial machines and equipment | Equipment such as floor scrubbers, landscaping machinery, workshop machines and commercial kitchen equipment may qualify if classified in an eligible CCA class. |
| Office furniture and fixtures | Business desks, chairs and qualifying fixtures are commonly depreciable property. Confirm the class and any installation or building-related costs separately. |
| Computers and network equipment | Qualifying equipment may be eligible, but important computer and data-network categories already had temporary immediate-expensing provisions. Do not assume the entire deduction is newly available. |
| Specialized professional equipment | Certain equipment used in clinics, laboratories or other service businesses may be eligible, depending on its actual tax classification. |
| Some capitalized software | The treatment depends on what was acquired and its tax class. A purchased capital software asset is different from an ordinary monthly software subscription. |
These examples illustrate why the phrase ‘qualifying purchase’ needs an explanation. For more detail about equipment, computers, vehicles and renovation exclusions, see our purchase-by-purchase eligibility guide. The Canada Revenue Agency’s CCA class guide describes how different types of equipment, computers, vehicles, leasehold interests and other assets are classified. That classification determines whether the new proposal applies.
What does not qualify, or requires a closer look?
The government explicitly excludes several classes of assets. Other everyday business spending is outside this new measure because it is normally treated as an operating expense rather than depreciable property.
| Purchase or expense | Treatment |
|---|---|
| Most ordinary commercial buildings and additions | Class 1 and Class 3 buildings and additions are excluded from the Productivity Mega Deduction. Eligible manufacturing and processing buildings have a separate temporary incentive. |
| Land | Land is not depreciable property and does not qualify for this immediate-expensing measure. |
| Goodwill, franchises and certain licences | Property in CCA Classes 14 and 14.1 is excluded. |
| Company cars and other vehicles | Certain vehicles in Classes 10 and 10.1 are excluded. Different vehicle categories, capital-cost restrictions and business-use rules mean there is no blanket 100% vehicle write-off. |
| Building renovations and leasehold improvements | Classification depends on the work. A building addition, repair, leasehold interest and separately identifiable piece of equipment can receive different treatment. |
| Advertising, wages, rent, consumable supplies and routine subscriptions | These are generally operating expenses under existing rules, subject to normal deductibility restrictions. The new capital-investment deduction is not required to write them off. |
For example, a restaurant buying a separately identifiable commercial oven is not making the same kind of purchase as one expanding its building. A clinic buying diagnostic equipment is not necessarily in the same position as one renovating leased premises. The CRA’s guidance on current versus capital expenses explains why the nature of the work and the lasting benefit matter.
Being excluded from the new deduction does not automatically mean an expense is never deductible. It may qualify under existing operating-expense rules, ordinary CCA, the Accelerated Investment Incentive, or another specific measure. The government says assets excluded from the new measure continue to receive the existing enhanced first-year deduction where applicable.
Does used equipment count?
Used equipment is not automatically disqualified, but the proposed rules include conditions. For property used before the business acquires it, neither the buyer nor a person who does not deal at arm’s length with the buyer can have previously owned it. The asset also cannot have been transferred to the buyer through a tax-deferred rollover.
A purchase of a used machine from an unrelated seller may therefore be treated differently from moving an existing asset between related businesses. Keep the seller’s details and purchase documentation, and confirm the transaction’s treatment before assuming eligibility.
What does a 100% write-off actually save?
Suppose a profitable business buys a $50,000 machine that qualifies for the new deduction. For a simplified example, assume its applicable income tax rate is 20% and it has sufficient taxable income to use the full deduction.
| Qualifying machine | $50,000 |
|---|---|
| First-year deduction | $50,000 |
| Illustrative income tax rate | 20% |
| Illustrative first-year tax reduction from the deduction | $10,000 |
The business still buys the $50,000 machine. It does not receive a $50,000 cheque or a $50,000 tax refund. At the assumed rate, the deduction can reduce first-year income tax by $10,000 compared with having no deduction for that purchase in that year.
That is also not necessarily an additional $10,000 in lifetime tax savings. Under ordinary CCA, the company generally could have deducted the asset’s cost over time. Immediate expensing mainly brings those deductions forward, potentially improving cash flow. The comparison with existing rules matters because some types of equipment already qualified for full or accelerated first-year deductions.
The actual result depends on the taxpayer’s income, applicable tax rates, other deductions, asset classification and the final legislation. If the business has no taxable profit, it cannot assume the example’s immediate tax reduction. Selling an asset later can also have tax consequences, including recapture of previously claimed depreciation in appropriate circumstances.
When can a business claim the deduction?
The announced acquisition cutoff is September 15, 2026. A qualifying asset must be acquired on or after that date. The deduction would be taken in the taxation year the asset becomes available for use, which is not necessarily the day a purchase order is signed or an invoice is paid.
For example, equipment purchased in September but not delivered and ready for business use until a later tax year may not generate an immediate-expensing claim in the purchase year. The normal available-for-use rules still need to be checked.
As of September 17, 2026, the Productivity Mega Deduction is a government proposal, not enacted tax law. September 15 is the proposed effective acquisition date, not proof that Parliament has passed the implementing legislation. Owners making significant commitments should check the final law and applicable federal and provincial treatment rather than rely on the announcement alone.
What about the other investment announcements?
The tax proposal was part of the broader Canada Investment Summit. The Prime Minister’s Office reported nearly $500 billion in investment commitments, including institutional investment, bank financing and individual projects. That headline does not mean $500 billion in grants is available for small businesses. The commitments have different conditions and timelines, and some of the financing is directed at sectors such as defence, technology and infrastructure. The official summit announcement sets out those commitments separately.
What should a business owner do before buying?
Start with the purchase itself. Does the business need it? Will it replace failing equipment, increase capacity, save labour or improve the service it provides? A tax deduction can affect the timing and after-tax cost, but it does not turn an unnecessary purchase into a good investment.
Then identify exactly what is being bought, how it will be used, its expected purchase and available-for-use dates, whether it is new or used, and which CCA class applies. Keep quotes, invoices, delivery records and relevant installation documents. Ask the business’s accountant to compare the proposed immediate deduction with the treatment already available, including any loss restrictions and provincial differences.
Investment decisions should fit the company’s broader plan for capacity, demand and cash flow. A business buying equipment to deliver more work should also consider whether it can actually win that work and support the additional capacity. Those are part of a coherent business growth and marketing strategy, but the tax analysis needs to stand on its own.
For now, the useful conclusion is straightforward: the federal government has proposed an earlier deduction for a much wider range of depreciable business assets, including assets used by service businesses. The benefit is not a reimbursement, the exclusions are real, and the exact tax result depends on the purchase and the business.
Official sources and article status
This article reflects information available on September 17, 2026. The main sources are the Department of Finance’s Productivity Mega Deduction backgrounder, the CRA’s CCA class guide, the CRA’s business-expense guidance, and the September 15 summit announcement. The proposed law may change before enactment; this article explains the announcement and does not replace tax advice for a particular transaction.
