Frequently asked questions

A proposed permanent change to Canada's capital cost allowance (CCA) rules announced on September 15, 2026. It lets businesses deduct 100% of the cost of most depreciable property in the year the property becomes available for use, instead of writing it off over several years.

The proposal applies to eligible depreciable property acquired on or after September 15, 2026. The deduction is claimed in the taxation year in which the property becomes available for use.

No. It was announced on September 15, 2026 and the Department of Finance has released draft legislative proposals amending the Income Tax Act and the Income Tax Regulations. Those are draft proposals, not enacted law, and no bill implementing the Mega Deduction by name has been identified. The Canada Revenue Agency generally administers announced measures as if enacted, which is why businesses plan around them, but the text can change before it passes.

The government says roughly two-thirds of capital investment will qualify, including computer equipment, software, machinery, vehicles, aircraft, patents, research and development, fibre-optic cable, mining property, pipelines, rail track, bridges and roads.

Buildings and additions in Classes 1 and 3; Class 14 and 14.1 property such as franchises, licences and goodwill; Class 51 property; certain vehicles in Classes 10 and 10.1 (notably passenger vehicles over the cost cap); and property depreciated under Schedules V and VI of the Income Tax Regulations.

The draft applies to a taxpayer, and expressly includes partnerships. There is an important restriction: where the taxpayer is neither a corporation nor an eligible partnership, the deduction cannot exceed the income earned from the business or property that uses the asset. In practice a sole proprietor cannot use it to create or deepen a loss, unlike a corporation. An eligible partnership is one whose members are all corporations or other eligible partnerships.

The draft carries no fixed annual dollar limit like the $1.5 million cap in the earlier temporary regime. The deduction is capped at the undepreciated capital cost of the eligible property that became available for use in the year. For a taxpayer that is neither a corporation nor an eligible partnership, which includes sole proprietors, it is further limited to the income earned from the business or property in which the asset is used.

Strictly, it is a deferral: you deduct the same total cost, just much sooner. In practice that means a large tax reduction in the year of purchase, which is cash you keep and can reinvest. The calculator on this site shows both the year-one reduction and the net present value of the acceleration.

Generally, the earlier of when the property is first used to earn income and the start of the second taxation year after acquisition, with specific rules for buildings and vehicles. For most equipment it means delivered, installed and capable of doing its job before your fiscal year-end.

The draft proposals and the Finance backgrounder are both silent on the half-year rule for this measure. The earlier temporary immediate expensing regime suspended it expressly. Since the deduction is 100% of cost in the year the property is available for use, the half-year rule has nothing left to restrict in practice, but the government has not said so in writing for this measure.

Ordinary recapture under the Income Tax Act still applies: sale proceeds reduce the undepreciated capital cost of the class, and a negative balance at year-end is income. After a 100% deduction there is no remaining cost base to absorb proceeds, so recapture becomes routine on any later sale or trade-in. The draft also amends the recapture rule for Class 10.1 passenger vehicles, depending on whether the vehicle was immediate expensing property.

CCA is a permissive deduction: you may claim any amount up to the maximum. Businesses with losses may prefer to claim less and preserve the deduction for later years.

Only capital property you own generates CCA. Operating lease payments are already a current expense. A financed purchase where you take title qualifies; a pure lease does not.

The deduction is federal, but the tax it reduces is federal plus provincial, so the calculator applies the combined rate. Eleven provinces and territories calculate corporate tax on the federal base through the Canada Revenue Agency, so the deduction would flow through once it is enacted. Alberta runs its own corporate tax and is expected to follow. Quebec adopts federal changes only when it announces them and has not confirmed this one, so for Quebec the calculator counts only the federal share and shows the rest separately.

Not automatically. Quebec writes its own corporate and personal tax rules and harmonizes with a federal measure only when it announces and passes the matching change. We found no official Quebec announcement for this measure, although one accounting firm reports that Quebec's premier has said the province intends to harmonize, with no details yet. Until Quebec acts, its existing capital cost allowance rules, which already include immediate expensing for some specified property, apply to the provincial share of your tax. The Quebec page lists the sources.

Alberta administers its own corporate income tax. It matched the earlier federal capital cost allowance enhancements, and its guidance says it adopts federal CCA changes automatically where its rules are harmonized, but it has not published anything about this measure. Treat Alberta as expected to follow, not confirmed. A corporation can also claim a different amount of CCA for Alberta than federally.

Ontario calculates corporate tax on the federal base, so an enacted federal change would flow through unless Ontario legislates an exception. We found no Ontario statement naming the Mega Deduction. Ontario's March 2026 budget separately promised matching write-offs for specified productivity assets and an enhanced first-year deduction for most other assets once the federal legislation passes, but that budget came before the Mega Deduction.

Only in limited circumstances. Used property qualifies only where neither you nor a person you do not deal with at arm's length previously owned it, and it did not come to you on a tax-deferred rollover. Buying a machine from an unrelated dealer can qualify. Moving an asset in from a related company, or buying back something you used to own, does not.

Not by this measure. Buildings in Classes 1 and 3 are excluded, and Finance has confirmed manufacturing and processing buildings stay outside the Mega Deduction. They remain eligible for the separate temporary immediate expensing introduced in Budget 2025, which covers buildings acquired on or after Budget Day and used for manufacturing or processing before 2030, phasing out between 2030 and 2033.

They continue under the Accelerated Investment Incentive, which gives an enhanced first-year deduction. Finance has stated that property not eligible for immediate expensing keeps that treatment, so the two measures run side by side rather than one replacing the other.