Productivity Mega Deduction: write off equipment in the year you buy it
Announced on 15 September 2026 and confirmed in Budget 2026: most business equipment can be deducted in full in its first year, instead of a slice each year through capital cost allowance.
Quick answer: The Productivity Mega Deduction would let a business deduct 100% of the cost of most depreciable property acquired on or after 15 September 2026, in the year it becomes available for use. It is proposed as permanent with no dollar cap. Buildings, goodwill, franchises and licences are excluded, and so are passenger vehicles that are used or assembled outside Canada.
How it works
Normally a business cannot deduct an equipment purchase all at once. It claims capital cost allowance (CCA), a percentage of the cost each year. The Mega Deduction lets most equipment be deducted in full in the first year it is put to use. The government estimates about 65% of business investment would qualify, up from about 15% under the previous rules.
What qualifies, and what does not
| Type of property | Covered? |
|---|---|
| Computers and software | Yes |
| Machinery and equipment (for example class 8) | Yes |
| Heavy equipment such as excavators (class 38) | Yes |
| Most buildings and additions to buildings | No |
| Goodwill, franchises and licences | No |
| Passenger vehicles bought used, or assembled outside Canada | No |
Example
A contracting company buys a $60,000 excavator in October 2026 and starts using it the same month. Under the Mega Deduction it can deduct the full $60,000 on its 2026 return. Under ordinary CCA it would deduct only part of the cost in 2026 and the rest over the following years.
Two things to watch
Recapture. If you later sell the equipment, the amount you receive (up to its cost) can come back into income, because you already deducted it all. Losses. Sole proprietors, trusts and partnerships with individual partners cannot use the deduction to create or increase a loss; corporations can.
What to do. The deduction applies in the year the property is available for use, not when it is ordered. If a December purchase will not arrive until January, the deduction moves to next year.
How the ordinary rules work: the half-year rule for CCA and equipment CCA classes.
Whether this applies to you depends on your year-end and structure; ask about your own situation and a CPA replies by email, usually the same business day, free.
Common questions
Does the Productivity Mega Deduction have a dollar limit?+
Can I write off my company car?+
Is it law?+
Where this comes from
Budget 2026 was tabled on 5 November 2026. Figures on this page are from:
- Thor — Productivity Mega Deduction announced
- Insights CPA — Productivity Mega Deduction: what is excluded
- BLG — Federal Budget 2026: tax measures
General information, not tax advice. Budget measures are proposals until enacted and can change. Before deciding anything, send an enquiry.