--- title: "Immediate Expensing of Manufacturing Buildings: 100% Year One" url: https://www.everstonecpa.com/tax-update/immediate-expensing-manufacturing-buildings description: "Immediate expensing: eligible manufacturing buildings get a 100% first-year deduction instead of decades of depreciation. What qualifies, and the election." type: tax-update updated: 2026-10-04 summary: "Eligible manufacturing or processing buildings qualify for a 100% first-year deduction, rather than being depreciated over decades. The full rate applies where the building is first used before 2030, then steps down." faq_count: 4 publisher: EverStone CPA Inc., a Chartered Professional Accountant firm registered with CPA British Columbia and CPA Alberta service_area: British Columbia, Alberta, Ontario and Manitoba language: en-CA contact: info@everstonecpa.com · https://www.everstonecpa.com/book-online --- [Home](https://www.everstonecpa.com/) [Tax updates](https://www.everstonecpa.com/tax-updates) Immediate expensing of M&P buildings Corporate tax # Immediate expensing of M&P buildings — Manufacturing and processing buildings can be written off in full in year one By EverStone CPA · Updated August 2026 **Quick answer:** Eligible manufacturing or processing buildings qualify for a 100% first-year deduction, rather than being depreciated over decades. The full rate applies where the building is first used before 2030, then steps down. **In force** · Property acquired on or after 4 November 2025 This measure is law and applies now. ## How it works When a business buys a building it cannot deduct the cost in the year it pays. The cost goes into a [capital cost allowance](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/report-business-income-expenses/claiming-capital-cost-allowance.html) class and is deducted a slice at a time, over decades, through depreciation. The deduction shrinks each year, because it is always a percentage of what is left. This change lets an eligible manufacturing or processing building be deducted in full in the first year instead — a 100% first-year deduction rather than a long schedule. The full rate is not permanent. It applies where the building is first used before 2030, then steps down: 75% for 2030 and 2031, 55% for 2032 and 2033, and no enhanced rate after that. At least 90% of the floor space must be used to manufacture or process goods, and the building must be new to the taxpayer. Storage, office and already-owned buildings do not qualify. ## How it applies to you Corporations that manufacture or process goods and are buying, building or expanding premises. It is a genuinely large deduction for a business in that position. The 90% floor-space test is the trap. A production building with a large office or warehouse share can fail it: the test is how the space is used, not what the company does. Because the deduction lands in a single year, it can push a company into a loss. That is not necessarily a problem — losses can be carried — but it changes the tax picture materially and is worth modelling rather than discovering. **Want a CPA to handle this for you?** Tell us about your business and get a fixed fee in writing within one business day. See [our published fees](https://www.everstonecpa.com/pricing), or [get a fixed quote](https://www.everstonecpa.com/book-online). [Get My Fixed Quote](https://www.everstonecpa.com/book-online) ## How to calculate it The deduction depends on when the building is first used: Calculation steps | Step | Detail | | First used before 2030 | 100% deducted in the first year | | First used in 2030 or 2031 | 75% | | First used in 2032 or 2033 | 55% | | First used after 2033 | no enhanced rate | Two dates matter: acquisition on or after 4 November 2025, and the date the building is **first used**, which sets the rate. Finishing in January 2030 rather than December 2029 cuts the deduction from 100% to 75%, a large difference set by construction, not tax planning. ## What changed Manufacturing and processing buildings have historically been slow write-offs. This allows the full cost in year one, falling to 75% for 2030 and 2031, 55% for 2032 and 2033, and no enhanced rate after that. ## What to do If a purchase or a build is in progress, model the timing before committing to a closing or completion date. The rate steps down on calendar boundaries, and a few weeks either side of one changes the deduction. Confirm the 90% floor-space test with actual measurements rather than an impression of how the building is used. A deduction this large in a single year interacts with everything else in the return — instalments, the [small business deduction](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4012.html), and how the owner draws income. It is worth planning around rather than claiming and seeing what happens. **The practical point.** The deduction depends on when the building is acquired and when it is first used, so the timing of a purchase or a completion date can change the deduction materially. It is worth modelling before committing to a closing date. The deduction is claimed on the CCA schedule of the corporate return for the year the building is put in use; [corporate return preparation](https://www.everstonecpa.com/corporate-tax-return-t2) covers the election. ## The terms used on this page Capital cost allowance The tax system’s version of depreciation: the cost of an asset deducted over time rather than all at once. First-year deduction The amount deductible in the year the asset is put to use. New to the taxpayer Not previously owned or used by you. A building you already held does not qualify. ## Common questions about immediate expensing of M&P buildings **Can I really write off a building in the first year?** In full, if it qualifies. A manufacturing or processing building has historically been a slow write-off; this allows the entire cost in year one for property acquired on or after 4 November 2025. **What has to be true for the building to qualify?** At least 90% of the floor space must be used to manufacture or process goods, and the building must be new to the taxpayer. **Does the full write-off last?** No — it steps down. The rate reduces to 75% for 2030 and 2031, 55% for 2032 and 2033, and there is no enhanced rate after that. **Why does my completion date matter so much?** Because first use sets the rate: finishing in January 2030 instead of December 2029 cuts the deduction from 100% to 75%, a large difference on a big building, decided by construction rather than tax planning. ## Where this comes from Every figure on this page is taken from the source below, not from interpretation: - [Budget 2025 — Tax measures: supplementary information](https://budget.canada.ca/2025/report-rapport/tm-mf-en.html) **General information, not tax advice.** This page explains a change in general terms. It cannot account for your circumstances and does not create a professional relationship. Confirm anything that affects a decision — [send an enquiry](https://www.everstonecpa.com/book-online). 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