Equipment purchases under the 2026 rules: timing the line upgrade

A machine bought in 2026 starts deducting on the date it is available for use, not on the date you signed the purchase order or wired the deposit. Available for use means working — delivered, installed and capable of running product. Bill C-15, law on March 26, 2026, reinstated the accelerated investment incentive and made the first year the big year again, so on a line upgrade, commissioning in December and commissioning in January sit a full year apart. What the bill did not do is let you write off a press. Most production equipment still comes off through capital cost allowance over a run of years, and the list of things that come off in full is short and aimed elsewhere.

The date the line runs is the date that counts

Capital cost allowance — CCA, the tax system’s version of depreciation — puts the cost of equipment into a class, a pool of similar assets, and gives it back a percentage at a time. Nothing comes back before the asset is available for use. A cell that lands on the 22nd and sits shrink-wrapped on the dock until February earns no deduction for the year it was paid for, and no invoice date changes that.

This is harder for a manufacturer than for anyone buying a van, because plant equipment does not arrive finished. It comes in sections. Riggers set it, an electrician pulls power, someone integrates the controls, it makes scrap for a week, and then it makes parts. The date you want is the one where the equipment could do what you bought it for — not the acceptance certificate, not the final payment. Further rules can start the clock differently for assets acquired in stages over a long period: a question to ask before the order.

Most production equipment is not on the immediate-expensing list

Bill C-15 did two different things to capital purchases, and owners tend to merge them. The first is the accelerated investment incentive: it suspends the half-year rule, which normally cuts the first year’s claim roughly in half, and gives an enlarged first-year deduction instead. The asset still sits in a pool and still comes off over years. The first year is simply the big one.

The second is immediate expensing, and it reaches a narrow list of productivity assets — computers · data-network infrastructure · patents. Those come off in full against the year’s income, no schedule behind them. A press, a CNC cell, a filler, a palletizer: generally not on that list. The test is what the asset is, not what your plant makes, and the full set of what moved this year is worth reading before you assume a route.

One project often splits across both. The machine takes the accelerated-CCA route; the control PCs beside it and the network drop feeding them can land on the immediate-expensing side — two different years’ worth of deduction on one purchase order, decided by how the invoice is broken out. Which class the machine belongs to matters as much. Equipment used in manufacturing and processing has generally had its own class and its own rate, separate from general equipment, and a machine coded to the wrong class gets the wrong deduction for the rest of its life.

A worked example: a press cell that misses the year by three weeks

Illustrative, round numbers, December 31 year-end, everything used entirely in the business.

A fabricator expects roughly C$450,000 of active business income for 2026, inside the small-business limit. In September it orders a C$400,000 press cell, pays a deposit on signing, takes delivery on November 20, and has riggers and electricians on it through December. The first production run is January 8, 2027. Separately, in early December, it racks C$30,000 of control PCs and plant network hardware and puts them to work.

The C$30,000 is expensed in full against 2026. At 9% federal on active business income within the first C$500,000 for an eligible CCPC, that is C$2,700 of federal tax, with the province’s rate on top. The C$400,000 is a 2027 addition. Deposit paid in 2026, invoice dated 2026, machine on the floor in 2026 — none of that is the test.

Finish commissioning on December 18 instead and the C$400,000 goes into the 2026 pool with the enlarged first-year claim in place of the halved one — the largest single-year deduction this cell will ever produce. Nothing about its total deduction changes; only the year it starts in. On a machine this size that is a year of tax, not a permanent saving.

A second decision sits underneath. A claim that size against C$450,000 of income can take the year to a loss, and a loss deducts at whatever rate applies to the years it is eventually applied against — carried back and forward within limits set in the Act. CCA is permissive: claim less than the maximum and the balance stays in the pool for a year when it is worth more. Whether the immediately expensed items work the same way is worth settling rather than assuming.

Borrowing changes the cash, not the deduction

CCA follows the asset’s capital cost, not how you paid for it. Buy the cell with cash or on a five-year note and the pool addition is identical. Principal repayments are not deductions and never were. Interest on money borrowed to earn business income is generally deductible as it accrues, on top of the CCA — the prescribed daily interest cap owners have heard about applies to money borrowed for a passenger vehicle, and that whole regime does not reach plant equipment.

Two cash items sit outside the deduction. Freight, rigging, installation and commissioning labour generally form part of the machine’s capital cost rather than being expensed, so what goes into the pool is larger than the vendor’s invoice. And the GST/HST on the purchase is generally recoverable in full as an input tax credit by a registrant using the equipment in commercial activity, claimed on the return for the period — on a C$400,000 machine that credit reaches the bank account long before the income-tax deduction does, with no capped-cost restriction of the sort that follows a car.

A heavy-claim year feeds forward, too. Corporate instalments are generally calculated from tax actually paid in prior years, so a large first-year deduction lowers next year’s instalments and the light year after raises them again. Instalments are generally not required where total tax payable is C$3,000 or less. The dates are here.

The machine you trade in comes back out of the pool

An upgrade is two transactions. The trade-in allowance the vendor nets off your invoice is proceeds of disposition, and proceeds come out of the class balance. On equipment owned and claimed against for years, that balance can sit well below what the old machine still fetches — and if the proceeds take the class below zero, the excess is recapture: CCA claimed in earlier years, handed back as income and taxed in full rather than half. Recapture behaves the same way on a building, where owners meet it more often.

So the year you buy can produce income as well as a deduction — and the two need not land in the same year if the old machine goes out in December and the new one runs in January.

What to settle before the purchase order

• The class and the first-year treatment. It turns on what the equipment is, not on how the invoice describes it.
• The commissioning date you honestly expect, vendor lead time included, against your year-end.
• How the invoice is broken out, so anything genuinely on the immediate-expensing list is identifiable rather than buried in a line reading “equipment.”
• The trade-in: what the old asset still carries in the pool, and what the allowance does to it.
• Whether any of the spend is development rather than production. Equipment bought to prove out a process can be a different claim since Bill C-15.

What Cadence does

We confirm the class and the first-year treatment before the purchase order goes out, and we ask for the commissioning schedule rather than the invoice, because that is the date the deduction hangs on. Before your year-end we size the claim against the year’s income instead of taking the maximum by default, and we work out what a trade-in does to the pool while the old machine is still on the floor. That work sits inside tax planning and advice and is included in the year-round packages; the compliance package covers the annual returns, and this conversation belongs before the return, not with it. SR&ED claim preparation, transfer pricing and customs rulings go to specialists — we flag them early and work alongside whoever you engage. Most of the owners we do this for are manufacturers, wholesalers and distributors buying one machine that outweighs a quarter of payroll.