A significant change to how Toronto-area corporations write off capital purchases is now in force at both the federal and provincial levels. Ottawa's Bill C-15 (the Budget 2025 Implementation Act, No. 1) received Royal Assent on March 26, 2026, and Ontario's own budget bill, Bill 97 (the Plan to Protect Ontario Act (Budget Measures), 2026), received Royal Assent on April 24, 2026, confirming the province is mirroring the federal accelerated capital cost allowance (CCA) and immediate expensing measures. For any Toronto-area corporation planning to buy machinery, a work vehicle, or a manufacturing building, these rules — not the ones your bookkeeping software may still default to — now govern how much of that cost you can deduct in year one.
Why a federal change matters for your Ontario tax bill
Ontario does not maintain its own separate capital cost allowance schedule. For corporate income tax purposes, the province generally adopts the federal Income Tax Act's CCA classes and rates as its starting point, so when Ottawa accelerates a deduction, Ontario's tax base moves with it unless the province specifically opts out. Ontario's 2026 Budget confirmed it is not opting out — it is deliberately paralleling, and in a few respects extending, the federal measures.
The underlying federal measures were introduced in Budget 2025 (tabled November 4, 2025) as a package the government branded the "Productivity Super-Deduction," legislated through Bill C-15.
Source: Government of Canada — Budget 2025, Tax Measures: Supplementary Information; Parliament of Canada — Bill C-15, Royal Assent.
The three changes that matter most
1. Immediate 100% write-off for new manufacturing and processing buildings. A corporation that acquires a building (or an addition to one) used at least 90% for manufacturing or processing, on or after November 4, 2025, and puts it into use before 2030, can now deduct the full cost in the year it becomes available for use — instead of the roughly 10%-a-year rate that applied under the prior manufacturing-building CCA class. The 100% rate steps down to 75% for property available for use in 2030 or 2031, and 55% for property available for use in 2032 or 2033, then disappears entirely for property available for use after 2033.
2. Immediate 100% first-year deduction for manufacturing/processing machinery and equipment, clean technology property, and zero-emission vehicles. Qualifying equipment acquired after 2024 and available for use before 2030 can also be fully expensed in year one, on the same step-down schedule (75% in 2030–31, 55% in 2032–33, then eliminated).
3. A reinstated, enhanced Accelerated Investment Incentive (AII) for most other depreciable property. For capital assets that don't fall into the two categories above — office equipment, leasehold improvements, most vehicles, furniture and fixtures, and similar general-purpose property — the AII now allows a first-year CCA claim of up to three times the normal rate, again for property acquired after 2024 and available for use before 2030, phasing out on the same 75%/55%/eliminated schedule through 2033.
Ontario estimates the combined package will deliver more than $3.5 billion in provincial income tax relief to qualifying businesses over four years, from 2025–26 through 2028–29.
Source: Government of Ontario — 2026 Budget Highlights.
What this actually changes for a Toronto-area business
For most owner-managed Toronto businesses, the practical effect shows up in three places:
- Equipment and vehicle purchases already made this year may qualify retroactively. Because the machinery, clean technology, and AII measures apply to property acquired after 2024, equipment or a qualifying vehicle bought earlier in 2026 — or even late 2025 — may be eligible for full or triple-rate first-year expensing on a return that hasn't been filed yet. This is not automatic; it depends on the asset class, the acquisition date, and whether the property was "available for use" in the correct window.
- The half-year rule doesn't apply the way it used to. Under the ordinary CCA regime, most new assets are subject to a 50% first-year limit. These accelerated measures suspend or override that limit for qualifying property, which is where the bulk of the tax benefit comes from — the deduction isn't larger in total over the asset's life, but it arrives in the year you need cash, not spread over a decade.
- Manufacturing floor space matters more than ever. The 90% floor-space test for the immediate building write-off is strict and binary — a Toronto business operating a mixed-use facility (warehouse plus retail showroom, for example) should have that split documented before claiming the deduction, not after a review.
A practical checklist before your next capital purchase or filing
- Pull your fixed-asset additions since January 1, 2025 and flag anything that might qualify for the M&P, clean technology, ZEV, or general AII treatment — don't assume your accounting system's default CCA rate already reflects the new rules.
- Confirm "available for use" dates, not just purchase dates, for any large 2025 or 2026 acquisition. The immediate-expensing rate depends on when the asset went into service, which can differ meaningfully from the invoice date for custom equipment or a building under construction.
- Document the 90% floor-space test in writing if you're claiming the manufacturing building write-off, including a floor plan or space allocation memo that would hold up under CRA or Ontario Ministry of Finance review.
- Time any planned 2026–2029 capital spending with the phase-out schedule in mind. A purchase that slips from 2029 into 2030 moves from a 100% write-off to 75% — a difference worth planning around if a purchase decision is already close to the calendar year-end.
- Revisit instalment estimates if a large capital purchase this year will materially reduce taxable income through immediate expensing — an instalment base calculated before the deduction was reflected may now be overstated.
The bigger picture
These changes land in the same year as Ontario's cut to the small business corporate tax rate (3.2% to 2.2%, effective July 1, 2026) — together, they represent the most significant one-year shift in the province's business tax environment in some time. The rate cut lowers what you pay on ongoing profit; the accelerated CCA rules change when you get the deduction for what you invest. A Toronto-area corporation weighing a machinery purchase, a fleet upgrade, or a new production facility now has a materially stronger after-tax case for moving that decision forward rather than deferring it — provided the paperwork behind the claim is done correctly the first time.
Key takeaways
- Both the federal enabling legislation (Bill C-15, Royal Assent March 26, 2026) and Ontario's own budget bill (Bill 97, Royal Assent April 24, 2026) are now law — these are not proposals still working through Parliament or Queen's Park.
- New manufacturing/processing buildings (≥90% floor space) acquired after November 3, 2025 and in use before 2030 qualify for a full 100% first-year write-off.
- M&P machinery and equipment, clean technology property, and zero-emission vehicles acquired after 2024 and in use before 2030 also qualify for 100% immediate expensing.
- Most other depreciable property acquired after 2024 and in use before 2030 qualifies for up to three times the normal first-year CCA rate under the reinstated Accelerated Investment Incentive.
- All three measures step down to 75% (2030–31) and 55% (2032–33) before disappearing after 2033 — timing matters for any purchase decision made close to those boundaries.
If your business has made capital purchases since January 2025 that haven't been reviewed against these accelerated rules, or you're weighing the timing of an equipment or facility purchase, RN Canada works with Toronto-area owner-managed businesses to make sure capital cost allowance claims are both maximized and properly documented.