What actually changed for Canadian business owners in 2026

Summary

Two federal bills changed how quickly your corporation can deduct the cost of the equipment it buys: Bill C-15 became law on March 26, 2026, and Bill C-30 on June 18. A third, Bill C-31, hasn’t passed and is still in the House of Commons.¹

When your corporation buys equipment, the tax deduction is called capital cost allowance, and the asset’s class sets the ordinary annual rate. First-year incentives can accelerate that deduction, moving tax relief forward without increasing the total cost you can deduct.

Equipment bought after December 31, 2024 and available for use before 2030 gets a year-one deduction roughly three times the old one. Available for use between 2030 and 2033, it’s roughly twice the old one.²
Computers, servers, network equipment and patents can be deducted in full in year one, provided you bought them after April 15, 2024. That treatment ends for anything first available for use after December 31, 2026. Which side of the date you land on is set by the day it becomes available for use, not the day you paid.³
Neither capital gains tax nor the federal small business tax rate on the first $500,000 of profit moved.⁴
Bill C-30 also made the employee-buyout capital gains deduction permanent, cut fuel excise tax to zero until September 7, 2026, with an extension proposed, and legislated a lower base CPP rate for 2027 that isn’t in force yet.⁵

In our view owners planning an equipment purchase should check two things before changing the delivery date: the enacted deduction and a new proposal. Finance’s September 15, 2026 Productivity Mega Deduction would make full first-year deductions permanent for most eligible equipment acquired from that date, including computers. It remains proposed as at September 25, 2026.⁶ We’d price the enacted rules below, then revisit timing if the proposal becomes law, because rushing a purchase around an expiring rule may no longer help.

How the first-year deduction works now

Each asset your corporation buys and keeps for more than a year (e.g. a laptop, a milling machine or a delivery van) sits in a numbered class with its own annual rate: most furniture and equipment in Class 8 at 20% a year, computers in Class 50 at 55%. The annual rate applies to the cost remaining after earlier claims, so deductions shrink over time. Ask which class applies before pricing a purchase around its tax deduction.

In the first year, a rule called the half-year rule normally lets you claim the annual deduction on only half of what you paid. Bill C-15 switched that rule off for property acquired after December 31, 2024 and available for use before 2034, a change called the reinstated accelerated investment incentive. For property available for use before 2030 the deduction is then worked out as though you had paid one and a half times the price.² You never deduct more than you paid in total, because the extra is pulled forward out of later years. A $60,000 machine in Class 8 used to give $6,000 in year one, being 20% of half its cost. Bought and available for use in 2026, the same machine gives $18,000.

The extra half disappears for anything first available for use after 2029, so the same machine first available for use in 2031 gets $12,000, being twice the old amount rather than three times. Several classes sit outside this rule and carry their own treatment: the three in the next section, manufacturing and processing equipment, clean energy equipment, zero-emission vehicles and leasehold improvements. Manufacturing equipment changed class at the end of 2025, from Class 53 to Class 43, and has its own guide.²

Two dates decide whether a purchase qualifies at all: you must acquire it after December 31, 2024 and meet the available-for-use test before 2034. That qualifying date also sets the first-year deduction. Acquisition means ownership passing to you, usually on delivery rather than when you order.⁷

The other condition is who you bought from. Used equipment from an unconnected seller qualifies in full, so paying a premium for new equipment to secure the deduction buys you nothing, whereas previously used equipment transferred from a corporation you control normally fails the acquisition conditions.⁸

The deadline of December 31, 2026

Three classes are treated better than the rest, grouped federally as productivity-enhancing assets: Class 44 for patents, Class 46 for data network infrastructure equipment (e.g. switches, routers and cabling) and Class 50 for computers and systems software. Property in any of the three can be deducted in full in the year it first becomes available for use, provided you acquired it after April 15, 2024. Under the enacted rules, anything first available for use after December 31, 2026 loses that full write-off, and the three return to their ordinary rates of 25%, 30% and 55%.³ The proposed Mega Deduction would change that result for eligible acquisitions from September 15, 2026, so the example below deliberately prices current law.⁶

“Available for use” is the phrase the rules turn on, and it doesn’t mean ordered, paid for or delivered. Equipment can qualify when first used to earn income or when delivered and capable of its intended function, whichever comes first, with other statutory triggers also possible. A server ready to operate in December can qualify then even if its first customer uses it in January.⁹ A year end other than December 31 doesn’t extend the window, because the test runs on the calendar rather than on your fiscal year.

Say your corporation has a December 31 year end and buys a $20,000 server. Available for use in December 2026, it produces a $20,000 deduction in the 2026 return. Available for use in February 2027 instead, it produces nothing in 2026 and $11,000 in 2027, being 55% of the full cost. The federal small business limit is the first $500,000 of profit from running the business each year.

On profit inside that limit an Ontario corporation pays about 11.7% in total for a year ending December 31, 2026, being 9% federal plus an Ontario rate that fell from 3.2% to 2.2% on July 1, 2026 and is prorated across that date.¹⁰ At that rate the deduction is worth about $2,340 of tax. Slipping to February 2027 pushes all $2,340 out of the 2026 return, recovers $1,232 of it in 2027 (a full year at the new rate, so 11.2% in total), and leaves roughly $1,100 to come in later years.

Arranging that timing is worth doing if you were buying the equipment anyway, though it moves only about $1,100 between tax years, so we wouldn’t buy hardware you don’t need to catch the date.

On profit inside that limit the deduction offsets income that would otherwise be taxed at about 11.7% combined federal and Ontario corporate tax in 2026about 11% combined federal and British Columbia corporate tax in 2026about 11% combined federal and Alberta corporate tax in 2026about 10% combined federal and Saskatchewan corporate tax in 2026about 9% combined federal and Manitoba corporate tax in 2026about 11.5% combined federal and New Brunswick corporate tax in 2026about 10.5% combined federal and Nova Scotia corporate tax in 2026about 10% combined federal and Prince Edward Island corporate tax in 2026about 11% combined federal and Newfoundland and Labrador corporate tax in 2026.¹⁰ The rate holds for the whole 2026 calendar year, with no mid-year change, so the case for the December date is the speed of the write-off itself: all $20,000 against 2026 profit rather than $11,000 against 2027 with the rest trailing in over later years.

Arranging that timing is worth doing if you were buying the equipment anyway, though what it changes is when the deduction lands rather than the total you eventually deduct, so we wouldn’t buy hardware you don’t need to catch the date.

On profit inside that limit the deduction offsets income that would otherwise be taxed at about 11.7% combined federal and Ontario corporate tax in 2026about 11% combined federal and British Columbia corporate tax in 2026about 11% combined federal and Alberta corporate tax in 2026about 10% combined federal and Saskatchewan corporate tax in 2026about 9% combined federal and Manitoba corporate tax in 2026about 11.5% combined federal and New Brunswick corporate tax in 2026about 10.5% combined federal and Nova Scotia corporate tax in 2026about 10% combined federal and Prince Edward Island corporate tax in 2026about 11% combined federal and Newfoundland and Labrador corporate tax in 2026.¹⁰ Part of that combined figure is new for 2026: Newfoundland and Labrador cut its provincial small business rate to 2% effective January 1, 2026, so the new rate covers the whole calendar year with no mid-year change. The case for the December date is therefore the speed of the write-off itself: all $20,000 against 2026 profit rather than $11,000 against 2027 with the rest trailing in over later years.

What didn’t change

Half of a capital gain, meaning the profit on a capital asset sold above its cost, is still what gets taxed. A proposal to raise that half to two-thirds was abandoned and never enacted.⁴ The federal small business tax rate didn’t move either: a Canadian-controlled private corporation still pays 9% federal tax on its first $500,000 of active business income, and 15% above that, with provincial corporate tax on top of both.¹¹ That $500,000 is shared across corporations under common control, and it shrinks where the group holds a lot of capital or earns a lot of investment income.¹²

The other things Bill C-30 did

Three more of C-30’s measures reach an incorporated owner, and they vary in weight.

Selling to your employees keeps its exemption. A separate capital gains deduction applies where an owner sells shares into an employee ownership trust, or converts the business to a worker co-operative. The deduction was written to expire, and C-30 made it permanent, turning a window nobody could plan around into a standing succession route.⁵ An employee buyout is built over years, so it’s worth costing now rather than when you want to sell, and it runs on its own deduction rather than the lifetime capital gains exemption.

C-30 set fuel excise tax at $0.00 from April 20 to September 7, 2026, and draft legislation of September 2, 2026 extends that to January 31, 2027, with half rates to March 31, 2027; as at September 2026 it is proposed, not enacted.¹³ The tax is charged well before the pump, so there’s nothing to file or claim.

The base CPP reduction is legislated for 2027 but isn’t in force yet. C-30 reduces the base Canada Pension Plan contribution rate for 2027 and later years, for employees, employers and self-employed people alike. The cut leaves the CPP enhancement and the second earnings ceiling alone, and those are the parts that have been climbing. It also doesn’t take effect on its own, because the reduction starts only on an order of the Governor in Council made with provincial consent, and no such order had been published as of September 2026. Nothing changes on a 2026 payroll run.⁵

How often this changes

The equipment rules changed twice inside twelve months, in the November 4, 2025 budget and again in the April 28, 2026 update that became C-30. The figures here therefore read as they stand today rather than as C-15 first enacted them.¹ Bill C-31 would add a first-year write-off for manufacturing and processing buildings bought after November 3, 2025, on narrow conditions (e.g. at least 90% of the floor space in manufacturing use), so we wouldn’t commit to a building purchase before it becomes law.¹⁴ An article like this one has a short shelf life, so we re-check it whenever a budget or an economic update lands, and whenever a bill in progress becomes law. For your own corporation, the check worth running is annual, a couple of months before your year end.

Closing thoughts

Most of what gets written about a federal budget is written about the country rather than about one corporation, and a measure that sounds enormous in a budget document can be worth a few hundred dollars to a small company. The narrower question is whether your corporation has a real business reason to spend money this year. If it doesn’t, almost nothing above applies to you.

How we handle it

We look at capital purchases before your year end rather than after it, because the available-for-use date can’t be chosen after the fact, checking the class it lands in and whether the acquisition date qualifies. We also decide how much capital cost allowance to claim rather than defaulting to the maximum, since a loss year can waste it. We prepare your corporation’s tax return, your year-end financial statements and your personal return as one job, so they agree with each other.

Parliament of Canada, LEGISinfo records for Bill C-15, Budget 2025 Implementation Act, No. 1, assented to March 26, 2026 (Statutes of Canada 2026, chapter 3), Bill C-30, Spring Economic Update 2026 Implementation Act, assented to June 18, 2026 (Statutes of Canada 2026, chapter 22), and Bill C-31, Budget 2025 Implementation Act, No. 2, at committee in the House of Commons. Verified 2026-08-09. ↩ ↩²
Income Tax Regulations, subsection 1104(4.01), defining reaccelerated investment incentive property as property acquired after 2024 that becomes available for use before 2034, with subsection 1100(2), element A.1(a), which gives an extra one-half before 2030 and nil after 2029 and excludes Classes 12, 13, 14, 15, 43.1, 44, 46, 50, 53, 54 to 56 and 59, and also excludes Class 43 in the circumstances described in paragraph (f), the limb that carries manufacturing and processing equipment and the reason this element does not reach it. Element C switches off the half-year adjustment. Verified 2026-08-09; the A.1(a) exclusion of Class 43 re-verified against the consolidation current to 2026-06-17 on 2026-08-20. ↩ ↩² ↩³
Income Tax Regulations, subsection 1100(2), elements A(c.1) to A(c.3), which require the property to be acquired and available for use after April 15, 2024 and before 2027 and apply factors producing a 100% first-year deduction, and elements A.1(c) to A.1(e), which set the enhancement to nil after 2026, with subsection 1100(1) for the ordinary rates of 25%, 30% and 55%. Verified 2026-08-09. ↩ ↩²
Income Tax Act, paragraph 38(a), setting the taxable portion of a capital gain at one-half. No increase to two-thirds was ever enacted. Verified 2026-08-09. ↩ ↩²
Bill C-30, the Spring Economic Update 2026 Implementation Act, assented to June 18, 2026 (Statutes of Canada 2026, chapter 22), read from the enacted text. The greenhouse measure is an elective separate class with a first-year step-down for years ending in 2030 and later. The employee-ownership-trust and worker-co-operative deduction was made permanent by C-30 sections 3 and 4, which replace the opening of Income Tax Act subsections 110.61(1) and 110.62(1) so the disposition need only have occurred after 2023. The fuel measure is C-30 section 11, adding section 9.2 to Schedule I of the Excise Tax Act, setting the rate at $0.00 for tax becoming payable from April 20 to September 7, 2026. The base CPP reduction is routed through Canada Pension Plan subsection 114(4) by C-30 section 44, so it needs a Governor in Council order made with provincial consent. Verified 2026-08-09. Rechecked 2026-09-24: no 2026 issue of the Canada Gazette, Part II, through September 23 carries the order. The Canada Pension Plan on Justice Laws, current to 2026-09-03, still lists C-30 sections 41 to 43 as not in force. The CRA’s July 2026 payroll formulas (T4127) say the government announced its intention on April 28, 2026 (i.e. in the update that became C-30). That intention is to start the cut on January 1, 2027, and an intention isn’t the order. ↩ ↩² ↩³
Department of Finance Canada, Productivity Mega Deduction backgrounder, September 15, 2026, read September 25, 2026. The proposal would permanently expense most depreciable property acquired on or after September 15, 2026 in its available-for-use year. Exclusions include Class 1 and 3 buildings, Classes 14 and 14.1, Class 51, certain Class 10 and 10.1 vehicles, and property under Schedules V and VI. Class 50 is not among those exclusions. Used property has previous-ownership and rollover restrictions. The announcement and accompanying draft proposals are not enacted law, and the worked examples retain enacted C15 rules. ↩ ↩²
Income Tax Regulations, subsection 1104(4) for accelerated investment incentive property acquired after November 20, 2018 and before 2025, with subsection 1100(2), element A(a)(ii), giving a nil enhanced factor, and element C, which still switches off the half-year adjustment. Verified 2026-08-09. ↩
Income Tax Regulations, paragraph 1104(4.01)(b), which excludes property previously owned by you or by a person not dealing at arm’s length with you, and property acquired on a rollover. Verified 2026-08-09. ↩
Canada Revenue Agency, Income Tax Folio S3-F4-C1, paragraphs 1.32–1.34 (https://www.canada.ca/en/revenue-agency/services/tax/technical-information/income-tax/income-tax-folios-index/series-3-property-investments-savings-plans/series-3-property-investments-savings-plans-folio-4-capital-cost-allowance/income-tax-folio-s3-f4-c1-general-discussion-capital-cost-allowance.html), and Income Tax Act 13(27). Equipment uses the earliest applicable trigger, including delivery plus capability, first income-earning use, the rolling-start rule and immediately before disposition. The worked example assumes the stated month is the first qualifying date. Verified 2026-09-25. ↩
Canada Revenue Agency, Corporation tax rates, for the general federal rate of 15% and the $500,000 business limit. Verified 2026-08-09. For Ontario: Ontario Ministry of Finance, Corporations Tax: Corporate Income Tax (ontario.ca), corroborated by 2026 Ontario Budget - Annex: Details of Tax Measures (budget.ontario.ca/2026/annex.html) and Bill 97 status page (ola.org). Verified 2026-08-13. The rate reduction is prorated for taxation years straddling July 1, 2026 (Ontario 2026 Budget annex: 'The tax rate reduction would be prorated for taxation years straddling July 1, 2026.'). Enacted by Bill 97, Plan to Protect Ontario Act (Budget Measures), 2026, S.O. 2026, c. 2, which amends s. 31(4) of the Taxation Act, 2007 so the small business deduction rate is 9.3% for days in a taxation year after June 30, 2026 (11.5% general rate minus 9.3% = 2.2%).For British Columbia: Province of British Columbia (Ministry of Finance), Corporate income tax rates – Province of British Columbia. Verified 2026-08-13. Rate of 2% effective April 1, 2017, and a business limit of $500,000 effective January 1, 2010. Budget 2026 (tabled February 17, 2026) announced no corporate income tax rate changes.For Alberta: Government of Alberta - Treasury Board and Finance / Tax and Revenue Administration, Tax, levy, and prescribed interest rates. Verified 2026-08-13. The current-rates table on the issuer page lists 2% with effective date July 1, 2020 (the rate has been 2% since 2017, and July 1, 2020 is the current table row). Alberta Budget 2026 (tabled 2026-02-26) made no corporate rate changes. The issuer rate table loaded 2026-08-13 shows no pending 2026 change.For Saskatchewan: The Income Tax Act, 2000, c I-2.01 (Saskatchewan), King's Printer consolidation, The Income Tax Act, 2000, s. 56(2) - Rates of tax. Verified 2026-08-13. Rate history in s. 56(2): 2% to Sept 30 2020, then 0% Oct 1 2020 - Jun 30 2023, then 1% from Jul 1 2023 with no end date. The 2026-27 budget (tabled March 18, 2026) makes no change: budget.saskatchewan.ca/economy states the budget is "maintaining the small business tax rate at one per cent".For Manitoba: Manitoba Finance, Corporate Income Taxes - Province of Manitoba. Verified 2026-08-13. Budget 2026 (tabled March 24, 2026, Information Bulletin 126) announced no corporate income tax rate changes, so 0% holds for all of 2026.For New Brunswick: New Brunswick Income Tax Act, S.N.B. 2000, c. N-6.001 (official consolidation, laws.gnb.ca), corroborated by NB Department of Finance and Treasury Board corporate tax page, New Brunswick Income Tax Act (consolidated), s.57(1)(a) and s.57(1.025). Verified 2026-08-13.For Nova Scotia: Nova Scotia Department of Finance and Treasury Board (novascotia.ca), Corporate income tax rates - Government of Nova Scotia. Verified 2026-08-13. The cut from 2.5% to 1.5% is applied on a days-prorated basis for taxation years straddling April 1, 2025 (NS Income Tax Act s. 40(2) formula, and CRA Schedule 346 Part 3 prorates 2.5% for days before April 1, 2025 and 1.5% after March 31, 2025). Budget 2026-27 (novascotia.ca/budget) keeps the rate at 1.5% - no 2026 change.For Prince Edward Island: PEI Department of Finance and Affordability, and the Income Tax Act, R.S.P.E.I. 1988, Cap. I-1, Provincial Corporate Income Taxes | Government of Prince Edward Island. Verified 2026-08-13. The 1% rate has applied since January 1, 2022 and was left unchanged by the July 1, 2025 package (which changed the general rate and threshold) and by Budget 2026. Statutory basis: Income Tax Act (PEI) s. 37.11.6 (years beginning on or after 2022-01-01 and ending before 2025-07-01) and s. 37.11.7 (years beginning on or after 2025-07-01), factor A = 1.0% in both.For Newfoundland and Labrador: Income Tax Act, 2000, SNL 2000 c I-1.1, s. 40(3) (as amended by 2026 c14 s4), announced in Government of Newfoundland and Labrador Budget 2026, Income Tax Act, 2000 (consolidated), House of Assembly of Newfoundland and Labrador, and the Budget 2026 News Release. Verified 2026-08-13. Announced in Budget 2026 (tabled April 29, 2026) retroactive to January 1, 2026, and already enacted: the consolidated statute's s. 40(3) reads 2% with amendment citation 2026 c14 s4. Section 40(4) prorates straddle years by days: 2.5% for days before January 1, 2026 and 2% for days after December 31, 2025. Budget 2026 also announced further cuts to 1.5% on January 1, 2027 and 1% on January 1, 2028, but those steps are NOT yet in the consolidated statute (no 1.5%/1% text found). The Finance department's Corporate Income Tax web page still showed 2.5% when loaded on 2026-08-13 - that page lags the statute. The combined figure adds the federal 9% small business rate to the province’s lower rate and is our arithmetic. For Ontario, the blended 11.7%, the 2027 figure of 11.2% and the dollar amounts worked from them are also our arithmetic, verified 2026-08-09 against the 2026 Ontario Budget annex and Bill 97 (S.O. 2026, c. 2), which cut the Ontario lower rate from 3.2% to 2.2% effective July 1, 2026, prorated for taxation years straddling that date. The CRA’s page still showed 3.2% when checked, and the owner surface for the Ontario cut is should you incorporate. Quebec and Alberta administer their own corporate tax and are not on the CRA page. ↩ ↩² ↩³
Income Tax Act, subsections 125(1.1) and 125(2), with Canada Revenue Agency, Corporation tax rates, giving a net federal rate of 9% on the first $500,000 of active business income. Verified 2026-08-09. ↩
Income Tax Act, subsection 125(5.1), which reduces the $500,000 business limit by reference to taxable capital employed in Canada and to adjusted aggregate investment income across the associated group. Our guide on investment income inside your corporation states those figures in full. Verified 2026-08-09. ↩
Department of Finance Canada, news release of September 2, 2026, “The Government of Canada extends the federal fuel excise tax relief on gasoline, diesel, and aviation fuels for Canadians”, and the accompanying Legislative Proposals Relating to the Excise Tax Act (September 2026). The proposals replace the opening of section 9.2 of Schedule I so the $0.00 rules apply to tax becoming payable after April 19, 2026 and before February 2027, deemed to have come into force on September 8, 2026, and add section 9.3 for tax becoming payable after January 2027 and before April 2027, under which $0.10 is read as $0.05, $0.11 as $0.055 and $0.04 as $0.02, in force February 1, 2027. The release states that full rates return on April 1, 2027: 10 cents per litre for gasoline and unleaded aviation gasoline, 11 cents per litre for leaded aviation gasoline, and 4 cents per litre for diesel fuel and aviation fuel. Neither document names a bill, and the Excise Tax Act consolidation current to 2026-06-21 still ends the $0.00 rate on September 7, 2026 (C-30 section 11). Verified 2026-09-06. ↩
Parliament of Canada, LEGISinfo record and text of Bill C-31, Budget 2025 Implementation Act, No. 2, passed at second reading June 3, 2026 and not assented to as of August 9, 2026, adding Income Tax Regulations paragraph 1100(1)(a.1) at 100% for years ending before 2030, 75% in 2030 or 2031, 55% in 2032 or 2033 and nil after 2033, applying to buildings acquired after November 3, 2025, with a 90% floor space test and a manufacturing building recapture event on a change of use of more than 10% of the floor space within ten calendar years. Verified 2026-08-09. ↩

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