How it differs from ordinary CCA
Under the usual rules, you cannot deduct the full cost of depreciable property in the year you acquire it. Instead you claim capital cost allowance each year at the rate for the property’s class, and in the first year the half-year rule generally limits the claim to one-half of the net additions. Immediate expensing replaces that gradual pattern with a first-year deduction of up to 100% of the cost.
The property must still be available for use. The CRA’s test is generally the earlier of the date you first use it to earn income, the second tax year after the year you acquire it, or just before you dispose of it. Paying an invoice in the last week of the year does not by itself earn a deduction.
What exists today and what is proposed
Several measures already use full expensing for specific property, such as manufacturing and processing machinery in Class 53 and specified clean energy equipment in Classes 43.1 and 43.2. An earlier measure for certain small businesses, described on the CRA’s forms, applied only to property that became available for use before 2025. It was capped at $1.5 million if you were not associated with another eligible person or partnership, and was shared across an associated group.
In September 2026 the Department of Finance announced the Productivity Mega Deduction, which it proposes as permanent immediate expensing for most depreciable property acquired on or after September 15, 2026. The proposal excludes Class 1 and Class 3 buildings, Classes 14, 14.1 and 51, certain Class 10 and 10.1 vehicles, and some other property, and it restricts previously owned property. Property that does not qualify would keep the accelerated investment incentive. A proposal is not law until it is enacted, so confirm its status before relying on it.
An illustrative example
A corporation buys $20,000 of qualifying equipment and it is ready for use before year-end. Assume, for illustration only, a class rate of 20%. Under the ordinary rules with the half-year rule, the first-year claim would be 20% of $10,000, or $2,000. With immediate expensing, the corporation could deduct up to the full $20,000 that year. The class balance then falls to nil, so later years have no deduction left for that equipment.
If the equipment is sold later for more than its remaining balance, the difference may be recaptured into income. Immediate expensing moves deductions earlier; it does not create extra deductions over the life of the asset.
What to discuss with your accountant
Bring invoices, delivery and in-service dates, the purchase price excluding land, and notes on any personal use or whether the item was bought from a related person. Ask which class applies, whether the item qualifies under a current or only a proposed measure, and whether a claim is wise for you. You may claim less than the maximum, and a smaller claim can suit a year with low income or expiring losses.
Related reading: see capital cost allowance, the half-year rule and terminal loss for the other ends of the same calculation.
Sources & editorial notes
Sources checked October 24, 2026. The examples are illustrative and provide general information. Discuss how the guidance applies to your circumstances with your accountant.
- How to calculate the deduction for capital cost allowance (CCA)Canada Revenue Agency
- Accelerated investment incentiveCanada Revenue Agency
- Complete the capital cost allowance chartsCanada Revenue Agency
- Productivity Mega Deduction announcementDepartment of Finance Canada
Rules and guidance can change. Use the current official source and confirm the treatment for your facts. To flag an error, contact Sora.