Full Expensing for Manufacturers and Processors
Full expensing for manufacturers and processors, which allows businesses to immediately write off the full cost of machinery and equipment used for the manufacturing or processing of goods (Class 53).
Offered by Canada Revenue Agency
Amount
100% first-year deduction for eligible manufacturing and processing machinery and equipment acquired after 2024 and available for use before 2030; 75% in 2030-2031; 55% in 2032-2033
Quick eligibility check
Who can apply
Such property qualifies if it is acquired after 2015 and before 2026 for use in Canada primarily in the manufacturing or processing of goods for sale or lease. This property would otherwise be included in Class 43 and qualify for a CCA rate of 30%.
If you acquire such property after November 20, 2018, and it becomes available for use before 2028, it is eligible for an enhanced first-year allowance.
The rules relating to short tax years and restrictions described for the AII apply in respect of this enhanced allowance.
The full expensing treatment only applies to Class 43 properties if they were acquired after 2025 and would otherwise be included in Class 53 if they were acquired in 2025.
About the funding
Currently, certain machinery and equipment may qualify for a temporary accelerated CCA rate of 50% calculated on a declining-balance basis under Class 53.
The enhanced allowance initially provides a 100% deduction in the year the property becomes available for use, with a phase-out for property that becomes available for use after 2023.
Full expensing effectively suspends the half-year rule for property eligible for this measure.
Year property becomes available for use: 2018 to 2023; Normal first-year allowance (half-year rule): 25; Enhanced first-year allowance for Class 53: 100; Enhanced first-year allowance for Class 43Footnote 15: N/A
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Year property becomes available for use: 2024; Normal first-year allowance (half-year rule): 25; Enhanced first-year allowance for Class 53: 75; Enhanced first-year allowance for Class 43Footnote 15: N/A
Year property becomes available for use: 2025; Normal first-year allowance (half-year rule): 25; Enhanced first-year allowance for Class 53: 75; Enhanced first-year allowance for Class 43Footnote 15: N/A
Year property becomes available for use: 2026; Normal first-year allowance (half-year rule): 15; Enhanced first-year allowance for Class 53: 55; Enhanced first-year allowance for Class 43Footnote 15: 55
Year property becomes available for use: 2027; Normal first-year allowance (half-year rule): 15; Enhanced first-year allowance for Class 53: 55; Enhanced first-year allowance for Class 43Footnote 15: 55
Year property becomes available for use: 2028 onward; Normal first-year allowance (half-year rule): 15; Enhanced first-year allowance for Class 53: N/A; Enhanced first-year allowance for Class 43Footnote 15: N/A
Full expensing for manufacturers and processors, which allows businesses to immediately write off the full cost of machinery and equipment used for the manufacturing or processing of goods (Class 53).
Similar programs
| Program | Type | Amount | Status |
|---|---|---|---|
| Accelerated Investment Incentive | Tax Credit | no fixed amount | Open |
| Air Quality Improvement Tax Credit | Tax Credit | no fixed amount | Open |
| Clean Technology Investment Tax Credits (ITC) | Tax Credit | no fixed amount | Open |
| Full Expensing for Clean Energy Investments | Tax Credit | 100% first-year deduction for eligible Class 43.1 clean energy equipment acquired after 2024 and available for use before 2030 | Open |
