Buying Equipment for Your Business? A New Tax Deduction May Apply
If you’re self-employed or operate a small business and are purchasing equipment or other capital assets, a newly proposed federal tax measure could significantly change when you receive the tax deduction.
On September 15, 2026, the federal government released draft legislation for the proposed Productivity Mega Deduction.
The proposal would permanently allow immediate expensing for a broad range of eligible depreciable property acquired on or after September 15, 2026.
What does that mean for a small business?
Normally, when you purchase equipment or another capital asset for your business, the entire cost isn’t necessarily deducted in the year of purchase. Instead, the deduction is generally spread over several years through Canada’s Capital Cost Allowance (CCA) system.
Under the proposed rules, most eligible depreciable property could qualify for a 100% CCA deduction in the year the property becomes available for use.
For a small business making a significant investment in equipment, computers, machinery or other eligible property, that could mean receiving the tax deduction much sooner.
There are exceptions
Not every business purchase will qualify.
Certain buildings, franchises, licences and goodwill, certain vehicles and some other types of property are excluded from the proposed immediate-expensing rules.
There are also restrictions involving previously used property and additional limitations for individuals and certain partnerships where claiming the deduction would create or increase a loss.
That means the fact that something was purchased for business purposes does not necessarily mean its entire cost can immediately be deducted.
Before assuming your purchase qualifies
The proposed Productivity Mega Deduction could be valuable for many small businesses, but the tax treatment will depend on the type of property purchased, its CCA classification, when it becomes available for use and your particular tax circumstances.
It is also important to remember that the Productivity Mega Deduction is currently proposed legislation. Draft legislation has been released, but the measure has not yet completed the legislative process.
Associate Tax Consultants Inc. will continue to follow developments as the proposed rules move forward and further guidance becomes available.
Contact Us
If you’re making a significant business purchase and aren’t sure how the proposed rules may affect you, contact us at info@deacur.ca or click the link below to find an office location closest to you and we can review the purchase and its appropriate tax treatment.
Source: Department of Finance Canada, Productivity Mega Deduction announcement and related draft legislative proposals, September 15, 2026.
Comments