Patents, licences and acquired IP: eligible
Patents and limited-life licences are Class 44 (25%) and already qualified for immediate expensing under Budget 2025. Goodwill, franchises and indefinite-life intangibles in Class 14.1 are excluded from the Mega Deduction.
Examples of patents and purchased intellectual property
- purchased patents
- limited-life licences to use a patented process
- acquired proprietary algorithms or codebases with a fixed term
Planning tip
How the purchase agreement describes the asset matters. A 'patent licence for 10 years' is Class 44. 'Goodwill' is Class 14.1 and does not qualify.
CCA Class 44 · regular rate 25% declining balance · half-year rule normally applies in year one.
Calculate the deduction on patents and purchased intellectual property
Worked examples (Ontario)
| Purchase | Old year-one deduction | New year-one deduction | Tax reduction, small business rate | Tax reduction, general rate |
|---|---|---|---|---|
| $25,000 | $3,125 | $25,000 | $2,800 | $6,625 |
| $100,000 | $12,500 | $100,000 | $11,200 | $26,500 |
| $250,000 | $31,250 | $250,000 | $28,000 | $66,250 |
Patents, licences and acquired IP by province
- Patents, licences and acquired IP in Alberta
- Patents, licences and acquired IP in British Columbia
- Patents, licences and acquired IP in Saskatchewan
- Patents, licences and acquired IP in Manitoba
- Patents, licences and acquired IP in Ontario
- Patents, licences and acquired IP in Quebec
- Patents, licences and acquired IP in New Brunswick
- Patents, licences and acquired IP in Nova Scotia
- Patents, licences and acquired IP in Prince Edward Island
- Patents, licences and acquired IP in Newfoundland and Labrador
- Patents, licences and acquired IP in Yukon
- Patents, licences and acquired IP in Northwest Territories
- Patents, licences and acquired IP in Nunavut
Free: the Year-End Purchase Checklist (PDF)
One page. What qualifies, what does not, the 'available for use' trap, and the seven questions to ask your accountant before you buy. No spam, unsubscribe any time.
The Mega Deduction Year-End Playbook
Everything you need to walk into your accountant's office with a plan instead of a question. Built for owner-managed Canadian businesses that expect a profitable 2026.
- Excel purchase planner with every province's rates and every CCA class pre-loaded. Model up to 12 purchases, see the year-one deduction, tax reduction and 10-year comparison for each.
- The 41-page Playbook (PDF): eligibility by asset class, the exclusions, 'available for use' rules, financing vs. leasing, recapture risk, CCPC vs. sole proprietor, and worked examples for 12 industries.
- Accountant brief template (Word): a one-page memo you fill in and send so your accountant can confirm the plan in one email instead of a meeting.
- 30-day action plan for purchases that must be delivered and installed before your fiscal year-end.
$97$47 CAD one-time, instant download
Secure checkout by Stripe. Files delivered immediately after payment. Not tax advice; every plan should be confirmed by your accountant.