The Productivity Mega Deduction: Immediate Capital Asset Write-Off
The federal government has proposed a broad productivity mega deduction allowing immediate expensing of most eligible depreciable capital property acquired on or after September 15, 2026. Instead of deducting eligible assets gradually through capital cost allowance (CCA), businesses could generally deduct the cost in the year the property becomes available for use.
How Would It Work?
For example, a business acquiring $100,000 of qualifying equipment could generally deduct the entire $100,000 in the year the equipment becomes available for use, rather than spreading the deduction over several years. This changes the timing of the deduction, not its total amount. The proposal does not include a phaseout of immediate expensing.
What Types of Assets Could Qualify?
- Machinery and equipment
- Computers and other technology
- Office furniture and equipment
- Tools and other business equipment
- Certain vehicles
What Would Be Excluded?
Notable exclusions include buildings and building additions, intangible assets such as franchises, licences and goodwill, and certain vehicles. The newsletter notes that, generally, a qualifying vehicle must be both new and assembled in Canada. Related-party transactions and previously owned or used property may also be excluded.
For individuals and partnerships with individual partners, immediate expensing would not be available to create or increase a loss from the relevant property or business activity.
Important: As reported in the October 2026 newsletter, this proposal had not yet been tabled or enacted. It should not be treated as an existing deduction without confirming subsequent legislative developments.
Action: Businesses planning significant capital purchases should review potential eligibility, acquisition dates and cash-flow implications with their tax advisor before relying on the proposal.