If you run a business and buy something like a desk, you have traditionally needed to deduct its cost over several years through capital cost allowance (CCA). On September 15, 2026, the federal government announced the Productivity Mega Deduction, a plan to let businesses deduct up to 100% of the cost of many assets in the year they become available for use. The government proposes to make this rule permanent. Fancy name aside, it's pretty much just a way to claim more CCA.

In the past if you bought a $1,000 desk, it would be added to Class 8 (20%), the half-year rule would apply, and you would be allowed to deduct just $100 for the year. With the new Mega Deduction it will still be added to Class 8, but you'll be able to deduct $1,000.

A very important limit for our users is that a sole-proprietor won't be allowed to create a first-year net loss by using the Mega Deduction.

But Allison, what about DIEP, AIIP, and RIIP?

Those who have been paying attention the last several years will remember the temporary designated immediate expensing property (DIEP) rules, the accelerated investment incentive property (AIIP) rules, and most recently the reaccelerated investment incentive property (RIIP) rules. Many of these rules created immediate or accelerated expensing for many properties in many classes. In 2025 for instance, you could deduct $300 for your desk. So no, this isn't really a new idea. They also do this in some big neighbours. What I do like is that it's meant to be permanent. AIIP and RIIP have phase-out dates, and DIEP had a short window. I want the government to simplify our tax laws; a broad rule without another expiry date is better than another temporary program in my opinion. The many many exceptions make it a little less simple than I'd like.

Would your purchase qualify?

Probably yes, this applies to many things including desks, chairs, shelving, larger tools and general equipment in Class 8, or business computers in Class 50. The purchase date and the date the asset becomes available for use both matter: the proposal generally applies to eligible property acquired on or after September 15, 2026, and the deduction belongs to the year it's available for use.

What about exceptions?

There are exceptions. Buildings in Classes 1 and 3, goodwill and certain licences in Classes 14 and 14.1, and some vehicles are excluded. Using a car partly for business does not, by itself, make it eligible: the draft excludes used or foreign-assembled passenger vehicles in Classes 10 and 10.1. If a vehicle does qualify, only its business-use portion can be claimed, subject to any passenger-vehicle cost limit. Other used property has additional conditions. And, as we mentioned above, a sole proprietor can't use this scheme to generate a business loss.