The Mega Deduction in British Columbia

British Columbia corporations pay a combined 11.0% on small business income (federal 9% + provincial 2%) and 27.0% at the general rate (15% + 12%). Every dollar deducted in year one under the Mega Deduction reduces tax by that percentage.

BC's PST generally applies to equipment purchases and is added to the capital cost you can write off.

Tax reduction on a $100,000 purchase, by asset class

Does British Columbia follow the federal Mega Deduction?

Follows the federal rule British Columbia calculates corporate income tax on the same taxable income as the federal return. If the federal measure is enacted as drafted, British Columbia corporations would get the same 100% first-year deduction for provincial purposes. A province can legislate an exception, and we found no British Columbia announcement of one.

Who collects British Columbia corporate tax?

The Canada Revenue Agency collects B.C. corporate income tax on the same T2 return as federal tax.

Has British Columbia said anything about this measure?

B.C. is the one jurisdiction we found speaking to this measure. A 2026 provincial news release refers to "B.C.'s participation with the federal government's new Productivity Mega Deduction."

Sole proprietors and partners

B.C. personal income tax is also administered by the CRA on the combined return, so the same result applies to sole proprietors and partners. The federal draft limits a non-corporate taxpayer to the income from the business or property source the asset is used in, so the deduction cannot create or deepen a loss.

Sources: B.C. corporate income tax · B.C. government news release. The federal measure: Department of Finance announcement · Draft legislative proposals. The Mega Deduction is draft legislation announced 15 September 2026; none of this applies until it is enacted.

What sales tax does to your deductible cost in British Columbia

British Columbia charges GST 5% + PST 7%. The federal GST is recoverable through input tax credits and stays out of the capital cost, but the provincial tax generally is not. That non-recoverable tax becomes part of what the asset cost you, so it is deductible along with the asset.

British Columbia PST is generally not recoverable, so it forms part of the capital cost and is deductible along with the asset. Manufacturers should check the production machinery and equipment exemption, which can remove PST from qualifying purchases entirely. Enter the tax-inclusive figure in the calculator to see the full deduction, not the sticker price.

All asset types in British Columbia

• Computer equipment
• Software
• Manufacturing and processing equipment
• General equipment, tools and furniture
• Commercial vehicles (vans, pickups, work trucks)
• Heavy trucks and tractors
• Zero-emission vehicles
• Patents, licences and acquired IP
• Clean energy and energy conservation equipment
• Data network infrastructure
• Farm machinery
• Construction and contractor equipment
• Medical and dental equipment
• Restaurant and hospitality equipment
• Media production equipment
• Aircraft
• Buildings and additions
• Goodwill, franchises and licences (Class 14.1)
• Passenger vehicles (Class 10.1)
• Qualified liquefaction equipment