Buying manufacturing equipment in 2026: when the 100% write-off actually starts

Summary

When your corporation buys a machine, the cost isn’t deducted the way a repair bill is. It goes into a numbered bucket the tax rules call a class, and comes off your corporation’s income over several years as capital cost allowance, or CCA. For a machine bought in 2026, though, the whole cost can usually come off in the first year.

1. Manufacturing equipment bought in 2026 lands in Class 43, which normally writes off at 30% a year on a declining basis (i.e. 30% of the cost in year one, then 30% of what’s left after that).¹ Rules that became law in March 2026 override that rate, so equipment acquired after 2024 and running before 2030 gets a first-year deduction of 100% of its cost instead.²
2. That first year is the year the machine becomes “available for use”, meaning commissioned: delivered, installed and able to make a saleable product.³ A purchase order, a deposit, or a crated machine on your floor on December 30 doesn’t get you there.
3. A used machine from an unrelated seller gets the same 100%, while one bought out of a company you already control doesn’t.
4. Under enacted law, computers, servers, network gear and their systems software get the 100% only if available for use before January 1 2027. A September 2026 proposal could replace that deadline for eligible new acquisitions, so check its status before rushing an installation.⁴⁵

We generally recommend driving the installation schedule so the machine is commissioned before your year-end, assuming you’d decided to buy it anyway. There’s one case where we’d say the opposite. It’s where this year’s profit sits below the small business limit and next year’s will be well above it. The limit is the first $500,000 of profit your corporation makes from its own operations, and a deduction is worth more in a year taxed at the higher rate.

What the write-off is, and which equipment gets it

Capital cost allowance is the deduction your corporation claims for an asset that wears out. You claim it on Schedule 8 of the T2, your corporation’s income tax return. Class 43 covers machinery acquired for use in Canada primarily, meaning more than half its use, in manufacturing or processing goods for sale or lease.¹ The cost includes delivery, installation and testing, not just the invoice price.⁶

The 100% comes from Bill C-15, which became law on March 26 2026 and brought back an enhanced first-year deduction for property acquired after 2024.² That bill is set out in what actually changed for Canadian business owners in 2026, which owns these figures. If the write-off comes to more than your profit, the excess becomes a loss. Your corporation carries that loss back against tax it has already paid or forward against future profit, so the deduction isn’t wasted, though the cash arrives later.

Two conditions sit on the 100%:

• The machine can’t have been owned before by you or by anyone you don’t deal with at arm’s length (e.g. you personally, your spouse, or a company any of you control), and it can’t have arrived on a rollover, meaning one of the transfers the rules let you make inside a group you own without triggering tax at the time.⁷ A used press from an unrelated dealer is fine, though buying the same press out of your own holding company costs you twice over. The half-year rule comes back, which halves the first-year claim. The machine also stays in whichever class the seller held it in rather than moving to Class 43.
• The business has to be manufacturing or processing in the first place. Construction, farming, fishing, logging, extracting minerals, and producing electricity or steam for sale are named in the rules as things that don’t count, so they’re shut out of Class 43 however industrial the operation looks.⁸

Available for use, and why the invoice date doesn’t decide it

Nothing enters a CCA class, and no deduction is available, until the property becomes available for use.³ For a recent equipment purchase, two common triggers are compared, with other statutory triggers described in the footnote.⁹ One is the day you start using the machine to earn income. The other is the day it’s been delivered and is capable, by itself or with equipment you already own, of producing a commercially saleable product.

Put another way, the event that matters is commissioning. A press that lands on your floor on December 20 and is still waiting on an electrician at your December 31 year-end isn’t available for use, and the whole 100% moves into next year’s return. Pulling a commissioning date forward carries a cost of its own, because a compressed acceptance test is how a plant ends up signing for a machine that isn’t fully proven. On a line of several machines going live on different dates, the date that counts is when the group could first make a saleable part, which we’d check against your commissioning records rather than assume.

The December 2026 deadline sitting inside the same project

The enacted rules give computers an earlier deadline than manufacturing machinery, though a new proposal could change that comparison for eligible acquisitions.⁵ Computers, servers and the systems software that runs them (Class 50), plus data network gear such as switches and routers (Class 46), get the 100% only where they become available for use before January 1 2027.⁴ After that they’re still deductible, but at their ordinary rates on a declining balance, which are 55% for Class 50 and 30% for Class 46.¹ Business application software sits in a different class again and never had the 2026 date on it.

Controls bolted to the machine are the one exception to that January 2027 date. Electronic process control and monitoring equipment is written out of Class 50 by name. As such a controller supplied and invoiced with the press normally rides with the press and its 2030 date, while the servers and switches beside it face December 31 2026.⁴ Where a single invoice mixes the two, split it on the fixed-asset schedule before the year-end rather than after.

The machine itself keeps the 100% while it becomes available for use before 2030. The first-year deduction then falls to 75% of the cost for 2030 and 2031, and 55% for 2032 and 2033.¹⁰ Both cutoffs are calendar dates, so they land cleanly only on a December 31 year-end. A taxation year straddling either one gets a blended rate, worked out across all of that year’s additions to the class rather than machine by machine.¹¹

When commissioning after your year-end pays

CCA is a maximum rather than a requirement, so you can claim anything from nil up to the year’s ceiling, though claiming less than the maximum doesn’t bank the difference. The 100% is available only in the year the machine becomes available for use, so the cost you hold back stays in Class 43 and comes off at 30% of the declining balance from then on.¹² Holding back $100,000 of deduction this year hands you $30,000 next year, then less each year after.

Moving the commissioning date from one taxation year into the next is the lever that does work. The federal rate on profit from your corporation’s own operations is 9% on the first $500,000 and 15% above that. So a dollar of deduction saves 9 cents in a year under the limit and 15 cents in a year over it. That six-point federal gap is a floor rather than the whole prize, because your province’s corporate rates sit on top of both figures and widen it (the Ontario rates are in should you incorporate). As such, if this year is thin and next year will be well above the limit, in our view that’s the one good reason to commission a machine after your year-end rather than before it. The reasoning holds only where next year’s forecast is solid and you don’t need the machine running in the meantime.

The $500,000 limit has conditions of its own: it’s shared across corporations associated with one another, it shrinks once the group’s taxable capital employed in Canada passes $10 million, and investment income inside the corporation grinds it down separately.

How often this changes

We’d re-run the numbers before every year-end while a project is live, and straight away if any of the following happens:

• The commissioning date on any computer, server, network gear or systems software slips past December 31 2026. Under enacted law the full deduction ends there, but the proposed Mega Deduction could change the answer for eligible acquisitions.⁴⁵
• The commissioning date on the machine slips past December 31 2029, which is the last day the 100% is available.¹⁰
• You manufacture outside Ontario, since other provinces run their own credits or none at all, and Quebec runs a separate tax system that needs the whole question checked again.

Closing thoughts

Most writing about buying equipment before year-end is built around the half-year rule, which normally halves your first-year claim. For a machine bought after 2024 from an unrelated seller and running before 2034, that rule is switched off. What’s left is a simpler question about your own plant, which is when the machine will actually run. In our view the rules here are a good reason to move a purchase you’d already decided on by a few weeks, and a poor reason to make one you hadn’t. We’ve kept several decisions off this page (e.g. Ontario’s own manufacturing credit, which pays cash on the same purchase, what the trade-in of the old machine does to your income, and sales tax), and on a project this size each of them moves real money.

How we handle it

We run the numbers against your commissioning schedule rather than your purchase order, and before the year-end rather than after it. The pieces are which class each part of the project lands in, what the deduction is worth this year compared with next, and which provincial credit the purchase qualifies for, after which we file Schedule 8 with the T2.