Software: eligible
Application software is normally Class 12 (100%, but subject to the half-year rule, so only 50% in year one). Systems software is Class 10 at 30%. The Mega Deduction removes the half-year drag and lets capitalized software be expensed in full in the year it is ready for use. Note that monthly SaaS subscriptions are already a current expense and are unaffected.
Examples of software licences and custom builds
- perpetual licences for design, CAD or accounting software
- custom internal tools and automation built for your business
- ERP or CRM implementation costs capitalized as software
- website and app development costs treated as capital
Planning tip
Custom development that you own outright is capital property; a subscription you rent is not. Structure the deal so you own the code if you want the write-off.
CCA Class 12 / 10 · regular rate 100% declining balance · half-year rule normally applies in year one.
Calculate the deduction on software licences and custom builds
Worked examples (Ontario)
| Purchase | Old year-one deduction | New year-one deduction | Tax reduction, small business rate | Tax reduction, general rate |
|---|---|---|---|---|
| $25,000 | $12,500 | $25,000 | $2,800 | $6,625 |
| $100,000 | $50,000 | $100,000 | $11,200 | $26,500 |
| $250,000 | $125,000 | $250,000 | $28,000 | $66,250 |
Software by province
- Software in Alberta
- Software in British Columbia
- Software in Saskatchewan
- Software in Manitoba
- Software in Ontario
- Software in Quebec
- Software in New Brunswick
- Software in Nova Scotia
- Software in Prince Edward Island
- Software in Newfoundland and Labrador
- Software in Yukon
- Software in Northwest Territories
- Software 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.