Immediate Expensing CRA Rules in 2026: How Canadian Businesses Write Off Capital Purchases Faster

Immediate expensing CRA rules let a Canadian business deduct the full cost of eligible capital property, such as machinery, equipment, or clean-energy assets, in the year it first becomes available for use, instead of writing it off slowly over many years. The rules around immediate expensing and the CRA changed again under Bill C-15 (Royal Assent March 26, 2026), so much of the advice circulating online is now out of date.

Every dollar your business spends on equipment is, in principle, a tax deduction. The real question is not whether you can deduct it, but when. Standard capital cost allowance first year canada rules spread that deduction across years or even decades. Accelerated measures let you claim most or all of it in Year 1, which frees up cash and lowers your effective cost of capital.

That timing matters more than usual right now, because the law has shifted three times since 2021. If the article or memo you are reading does not mention Bill C-15, it may be describing rules that no longer apply. This post sorts out three distinct eras: the temporary measure for private corporations that has now expired, the original Accelerated Investment Incentive that began phasing out, and the reinstated and expanded version that is in force today.

Current Status as of 2026: Read This First

Before getting into the mechanics, here is the short version of where each measure stands today.

• Expired: The temporary immediate expensing CCPC measure, which allowed up to $1.5 million per year of designated immediate expensing property (DIEP), is no longer available for new property.
• Superseded for most new purchases: The original Accelerated Investment Incentive Canada measure from 2018 began a scheduled phase-out, but for property acquired after 2024 it has largely been replaced by the reinstated rules.
• Active: The reinstated and expanded Accelerated Investment Incentive Canada, the centrepiece of the package the federal government brands the "Productivity Super-Deduction," now applies to eligible property acquired on or after January 1, 2025 and available for use before 2030.

If you take one thing from this article, take this: the measure most commonly described online, the $1.5 million immediate expensing CCPC rule, has expired for new property, and a broader replacement is now in force.

A Quick Refresher on Capital Cost Allowance

To follow the rest of this post, you need a little vocabulary. CCA is the tax version of accelerated depreciation CRA rules use to govern the write-off of depreciable assets. Most depreciable assets sit in a prescribed class with a set annual rate. General equipment in Class 8 is written off at 20 percent per year, for example, and most vehicles in Class 10 at 30 percent. The rate is applied on a declining-balance basis, so the deduction shrinks each year.

There is also the half-year rule. In the year you acquire an asset, you can normally claim only half of the usual CCA rate. That rule pushes even more of the deduction into later years.

Consider a $500,000 machine in Class 8. Under standard rules, your capital cost allowance first year Canada deduction is roughly $50,000, because the 20 percent rate is cut in half for the year of acquisition. You have spent half a million dollars but sheltered only $50,000 from tax in Year 1. Accelerated measures change that picture dramatically.

It helps to remember what acceleration actually does. The total amount you deduct over the life of the asset is the same either way. Acceleration shifts the benefit forward in time. The value lies in improved cash flow and a lower cost of capital, not in a larger lifetime deduction. This is a deferral tool, not a permanent tax cut.

Era One (Expired): The Temporary Immediate Expensing CCPC Measure

Introduced in Budget 2021, this measure let CCPCs write off up to $1.5 million per year of designated immediate expensing property in the year the property became available for use. Within that annual cap, qualifying property could be deducted at 100 percent in Year 1.

Designated immediate expensing property, or DIEP, covered most depreciable property. The main exclusions were long-lived assets: Classes 1 to 6 (buildings), Class 14.1 (goodwill and similar intangibles), Class 17 (roads and parking areas), and Classes 47, 49, and 51 (pipelines and utility-type assets). Associated corporations had to share the single $1.5 million annual limit, so a corporate group could not multiply the benefit across related entities.

The measure originally applied to CCPCs and was later expanded in 2022 to include individuals resident in Canada and certain Canadian partnerships. The acquisition and availability windows differed by taxpayer type. For CCPCs, the property generally had to become available for use before January 1, 2024. For individuals and partnerships, a later cutoff (before January 1, 2025) applied, so the precise rule by entity type should be confirmed for any specific filing.

The status today is straightforward: this measure has expired, and no new property can enter the program. There is, however, a practical wrinkle for past purchases. A CCPC that bought qualifying property during the active window may still have deductions to claim on the return for the tax year in which the property first became available for use. If your business acquired equipment in, say, late 2023, the DIEP treatment may still be relevant to that filing even though the program itself is closed to new property.

A word of caution. This measure is frequently reported online as if it were still active. Blog posts, accountant memos, and software notes written before 2024 will often describe the $1.5 million rule as current. For any purchase you are planning today, it is not.

Era Two (Phasing Out): The Original Accelerated Investment Incentive Canada

The original Accelerated Investment Incentive Canada arrived in the 2018 Fall Economic Statement. It applied to eligible property, broadly meaning most depreciable property acquired after November 20, 2018 and available for use before 2028.

The accelerated investment incentive Canada offered two enhancements over standard CCA. First, it suspended the half-year rule, so first-year CCA was calculated as if the asset had been owned for the full year. Second, it applied an enhanced first-year rate. For property normally subject to the half-year rule, CCA was calculated on an enhanced base in Year 1, which had the net effect of roughly tripling the normal first-year deduction once the suspended half-year rule was taken into account.

The original measure also delivered full first-year expensing for certain special classes, including Class 53 (manufacturing and processing machinery and equipment) and Classes 43.1 and 43.2 (clean-energy generation and conservation equipment).

The catch was the scheduled phase-out. For property available for use after 2023, the enhanced rates were set to step down: a reduced enhancement for 2024 through 2027, then full elimination after 2027 under the original schedule. That schedule has now been overtaken by the reinstatement described below for property acquired after 2024. The reduced 2024-to-2027 rates effectively apply only to property acquired before January 1, 2025. The treatment of property acquired during 2024 sits at a transition point that should be confirmed with tax counsel.

This is where business owners pursuing tax-efficient capital planning often go wrong, and where working with experienced Toronto corporate lawyers on the underlying structure makes a real difference. The phase-out language is still all over the internet, but it no longer tells the whole story.

Era Three (Current): The Reinstated Accelerated Investment Incentive, or "Productivity Super-Deduction"

This is the heart of the matter for any business buying capital assets today. The federal government proposed reinstating the accelerated investment incentive Canada in the 2024 Fall Economic Statement, confirmed and expanded it in Budget 2025, and implemented it through Bill C-15, the Budget 2025 implementation legislation, which received Royal Assent on March 26, 2026. Practitioners and tax software often refer to the reinstated regime as "Reaccelerated Investment Incentive Property," or RIIP, to distinguish it from the original measure.

Three features make the reinstated measure broader than the temporary immediate expensing CCPC rule it effectively replaces.

It is open to all businesses. The reinstated incentive is not limited to CCPCs. Corporations, individuals, and partnerships can all qualify. This is a meaningful change from the expired DIEP rule, which was restricted to CCPCs, individuals, and Canadian partnerships.

There is no dollar cap. Unlike the old $1.5 million ceiling, the reinstated measure does not impose a per-business annual limit on the property that can qualify.

The enhanced deduction is substantial. Eligible depreciable property acquired on or after January 1, 2025 and available for use before January 1, 2030 is not subject to the half-year rule. For property normally subject to the half-year rule, the first-year deduction is roughly three times the normal amount, and for property not normally subject to the half-year rule, roughly 1.5 times the normal amount.

The reinstated rules also restore full first-year expensing for the special classes. Class 53 manufacturing and processing equipment, Classes 43.1 and 43.2 clean-energy and conservation equipment, and zero-emission vehicles in Classes 54, 55, and 56 all qualify for full first-year write-off when acquired within the eligibility window.

One detail to watch: Class 53 as a category is scheduled to end after 2025 for new acquisitions. From 2026 onward, manufacturing and processing machinery generally falls into Class 43 (a 30 percent rate). The reinstated incentive still delivers a full first-year write-off for that equipment, provided it would have qualified as Class 53 property had it been acquired in 2025. This is exactly the kind of moving part that makes professional review worthwhile for 2026 purchases.

The New Measure for Manufacturing and Processing Buildings

Budget 2025 added something genuinely new. Eligible manufacturing and processing buildings in Class 1 can now qualify for immediate expensing CRA treatment, meaning a full first-year deduction, when acquired on or after November 4, 2025 (Budget Day) and first used for manufacturing or processing before 2030.

To qualify, the building generally must be used at least 90 percent for manufacturing or processing, measured by floor space, and it must be a newly acquired building that was not previously owned by the taxpayer or a non-arm's-length person. This is a significant departure from the historical treatment of buildings, which sit among the slowest assets to write off at a 4 percent declining-balance rate. The enhanced deduction for these buildings steps down for property first used in 2030 and later, and a change in the building's use after the fact can trigger recapture.

When the Reinstated Measure Phases Out

The full enhancement is tied to property becoming available for use before 2030. After that, the incentive steps down. Property available for use in roughly 2030 to 2031 receives a partial enhancement, property available for use in roughly 2032 to 2033 receives a smaller enhancement, and property available for use after 2033 reverts to standard CCA rates with no enhancement.

The planning takeaway is the timing of "available for use," not just the date of purchase. The window for full expensing closes for property that becomes available for use before January 1, 2030. For a business mid-way through 2026, that is roughly a three-and-a-half-year runway, and partially constructed assets that are not yet available for use may fall outside it.

A Worked Illustration

To make this concrete, take a Toronto manufacturer that buys $800,000 of manufacturing equipment in the third quarter of 2026, available for use in November 2026.

Under standard CCA treatment (assume Class 43 at 30 percent declining balance with the half-year rule), the Year 1 deduction would be roughly $120,000.

Under the reinstated incentive with full expensing for qualifying manufacturing equipment, the Year 1 deduction is the full $800,000. At an illustrative combined corporate tax rate of 26.5 percent, that is roughly $212,000 of tax deferred in Year 1, compared with roughly $31,800 under standard CCA.

The important caveat bears repeating: this is a deferral. Once the full cost is deducted, future CCA on that asset drops to nil, so the lifetime deduction is unchanged. The benefit is the time value of money and the cash flow it frees up now. Actual outcomes depend on the business's income, tax rate, and circumstances, and this illustration is not tax advice.

Key Planning Considerations

A CRA webpage can tell you the rates. What it cannot do is help you fit these measures into the rest of your tax position. A few points routinely matter.

"Available for use" is a defined concept. The Income Tax Act sets rules for when property is considered available for use. Machinery still being installed, or a building still under construction, may not yet qualify. Timing the commissioning of an asset can determine which tax year captures the accelerated depreciation CRA deduction.

Group structure still matters even without a cap. The reinstated incentive has no per-business dollar limit, unlike the old $1.5 million DIEP cap that associated corporations had to share. Even so, which entity in a corporate group holds the asset can affect the after-tax result, especially where income and rates differ across the group.

Recapture and terminal loss can follow disposition. If a business fully expenses an asset and later disposes of it, the usual recapture and terminal-loss rules apply. Structuring the acquisition and any later sale with these consequences in mind avoids surprises.

Accelerated claims are not audit-proof. The CRA can challenge the class into which property has been placed and whether it was truly available for use. Keeping records of the acquisition date, the available-for-use date, and the basis for the class designation is the best defence against a reassessment.

These measures interact with other incentives. The reinstated incentive can intersect with Scientific Research and Experimental Development (SR&ED) credits, provincial investment tax credits, and the Clean Technology Investment Tax Credit. Whether claiming accelerated CCA on Classes 43.1 or 43.2 affects eligibility for other credits is a question to work through deliberately.

Cross-border groups face added complexity. Businesses with a US parent or cross-border operations should note that accelerated Canadian deductions can create temporary differences for accounting purposes and may bear on thin-capitalization or transfer-pricing positions.

One housekeeping note. The CRA is still updating its published guidance to reflect Bill C-15. Always verify current guidance at canada.ca, because the agency's accelerated-investment-incentive page may not yet fully reflect the reinstated rules.

A Three-Era Summary

Frequently Asked Questions

What is immediate expensing for Canadian businesses? Immediate expensing is the ability to deduct the full cost of eligible capital property in the year it becomes available for use, rather than writing it off gradually through CCA rates over multiple years.

Is the $1.5 million immediate expensing still available for CCPCs in 2026? No. The temporary immediate expensing CCPC measure (DIEP) expired for new property that became available for use before January 1, 2024. It has been replaced by the reinstated Accelerated Investment Incentive, which has no dollar cap but different rules.

What is the Accelerated Investment Incentive and how does it work? The Accelerated Investment Incentive Canada, reinstated under Bill C-15, suspends the half-year rule and provides an enhanced first-year CCA deduction on eligible property. For most qualifying property acquired in 2025 through 2029, the first-year deduction is roughly three times what it would be under standard CCA.

What is designated immediate expensing property (DIEP)? DIEP was the category of property that qualified for the temporary immediate expensing CCPC measure (2021 to 2023). It covered most depreciable property except long-lived assets in CCA Classes 1 to 6, 14.1, 17, 47, 49, and 51. The term no longer applies to new property.

Can I still claim accelerated CCA on equipment purchased in 2026? Yes, under the reinstated incentive. Property acquired in 2025 or later that becomes available for use before 2030 qualifies for an enhanced first-year CCA deduction under Bill C-15.

What CCA classes qualify for full expensing under Canadian tax law? Under the reinstated measures, Class 53 (manufacturing and processing machinery), Classes 43.1 and 43.2 (clean-energy equipment), and zero-emission vehicles in Classes 54, 55, and 56 qualify for full first-year expensing. Eligible Class 1 manufacturing and processing buildings acquired on or after November 4, 2025 also qualify.

When does the accelerated depreciation CRA phase out? Under the current rules, the full enhanced deduction applies to property available for use before 2030. From 2030 to 2033, the enhancement steps down, and after 2033, standard CCA rates apply.

How does the "Productivity Super-Deduction" differ from the old AIIP? The government's "Productivity Super-Deduction" is the umbrella label for a package of accelerated write-off measures under Bill C-15, with the reinstated Accelerated Investment Incentive Canada at its core. It is open to all businesses (not only CCPCs), has no dollar cap, and adds the new measure for manufacturing and processing buildings. It is broader and in some ways more generous than the original measure.

Do I need to designate property on a CRA form to claim accelerated CCA? Under the old DIEP measure, qualifying property had to be designated on a prescribed CRA form. The reinstated incentive is generally claimed through the ordinary CCA calculation rather than a separate designation, but the procedural steps should be confirmed with a tax lawyer or accountant.

Should I buy equipment now to take advantage of accelerated CCA? The full-expensing window runs to the end of 2029 for property available for use before 2030. Whether accelerating capital spending makes sense depends on your business's income, corporate tax rate, and cash flow, not the deduction alone. Professional modelling of the after-tax impact is worthwhile before committing.

Sources & Official Resources

Federal Budget and Legislation

1. Budget 2025: Tax Measures Supplementary Information (Productivity Super-Deduction)
2. Bill C-15, Budget 2025 Implementation Act, No. 1 (LEGISinfo)

Canada Revenue Agency Guidance 3. Accelerated Investment Incentive (Canada Revenue Agency) 4. Classes of Depreciable Property (Canada Revenue Agency) 5. Income Tax Folio S3-F4-C1, General Discussion of Capital Cost Allowance

Contact Hadri Law

Accelerated CCA and immediate expensing CRA rules can create real cash-flow advantages for Canadian businesses, but the rules are technical, they change frequently, and they interact with other tax incentives in ways that reward careful planning. If you are weighing a major capital purchase or reviewing your corporate tax strategy, our Toronto corporate tax lawyers can help you structure it correctly.

At Hadri Law, tax lawyer Martina Caunedo (LSO 2024, LLM Osgoode 2022) brings more than 12 years of international tax experience, including CRA audit defence and Tax Court appeals, to questions like these. Reach us at (437) 974-2374 for a free initial consultation. We work with clients in English, French, Spanish, and Catalan.

This article is for general information only and does not constitute legal advice. Reading or relying on it does not create a solicitor-client relationship with Hadri Law Professional Corporation.