A business aircraft bought in Canada on or after 15 September 2026 can, under a proposal announced that day, be written off in full in the year it becomes available for use. Until now the same aircraft sat in capital cost allowance Class 9 and was deducted at 25 percent a year on a declining balance. The government says the change is permanent.
Prime Minister Mark Carney announced the Productivity Mega Deduction at the Canada Investment Summit in Toronto. According to the Department of Finance, it raises the share of investment in capital assets eligible for immediate expensing from roughly 15 percent under the previous Productivity Super-Deduction to about two thirds, and halves Canada's marginal effective tax rate on new business investment from 13.0 percent to 6.4 percent. Finance puts the cost at C$36 billion over five years, beginning in 2026-27.
Aircraft are on the list, and so are used ones
The Department of Finance news release does not single out aircraft. The list of qualifying assets that accompanied the announcement does. Gowling WLG and Osler both reproduce it as "fibre-optic cable, mining property, oil and gas pipelines, software, research and development, computer equipment, aircraft and vehicles, patents, rail track, bridges, and roads", and McMillan's note for the aviation sector names aircraft and flight simulators specifically.
The exclusions cover buildings, franchises, licences and goodwill, regulated natural gas pipelines and certain vehicles in Classes 10 and 10.1. Aircraft are not among them.
Pre-owned aircraft qualify, which is where the measure reaches most of the market. The condition, as Osler summarises it, is that the prior owner was at arm's length and the aircraft was not transferred on a tax-deferred rollover. A buyer purchasing from an unrelated seller through a broker is inside the rule. An owner moving an aircraft between their own companies, or buying back from a related party, is not.
Harlan Simpkins, president and chief executive of the Canadian Business Aviation Association, called the announcement a significant advocacy win, reached jointly with the helicopter, air transport and aerospace industry associations.
It is still a proposal
Draft legislative proposals for the Income Tax Act and Income Tax Regulations were released alongside the announcement. None of it is law yet. DLA Piper cautions that the proposals remain in draft form and may change before enactment. A buyer who signs on the strength of the draft is betting on it passing in substantially this form.
What changes in the arithmetic
The effect is on timing. On a C$20 million aircraft, AVNET's illustration at the ordinary 25 percent Class 9 rate gives a first year deduction of C$5 million before any first-year adjustment, with the rest recovered over many years. Under the proposal, the full C$20 million is deductible in the year the aircraft is available for use.
Illustration: a C$20 million aircraft
How much of the cost has been deducted, year by year
Cumulative deduction under the ordinary Class 9 rate of 25 percent on a declining balance, against the proposed Productivity Mega Deduction. AVNET arithmetic, before any first-year adjustment. Amounts in C$ millions.
The deduction moves tax, it does not remove it. On a later sale, proceeds up to the original cost come back into income as recapture, so a jet that holds its value hands back most of what was deducted.
Sources: Department of Finance Canada, 15 September 2026; Osler; Gowling WLG; Canada Revenue Agency Class 9 rate. Proposal in draft, not yet enacted.
That makes the delivery date a tax date. ch-aviation, reporting on the proposal, notes that an aircraft still in completion or refurbishment does not yet qualify, and the deduction moves to the year it becomes operational. A green aircraft that slips from December into January moves the entire deduction into the next taxation year. For a buyer with a calendar year end, the completion slot and the entry into service inspection now sit on the same critical path as the tax return.
The deduction is not free money. Under the ordinary capital cost allowance rules, when an aircraft is sold, proceeds up to its original cost are brought back into income as recapture. The deduction therefore defers tax rather than removing it, and the size of the eventual recapture depends on what the aircraft is worth when it leaves. With business jets currently holding their value far better than the old depreciation assumptions suggested, an owner who writes off the full cost today and sells in five years could face a recapture close to the original deduction.
The individual owner's limit
The deduction is narrower for individuals. According to Osler and DLA Piper, where the aircraft is held by an individual, or by a partnership with individual members, the deduction is limited to income from the business or property in which the aircraft is used, and cannot create or increase a loss. An aircraft held personally, and flown mostly for its owner, generates little income for the deduction to shelter.
Canada has closed a gap, not opened one
Reading this as Canada overtaking the United States would be wrong. The One Big Beautiful Bill Act, signed on 4 July 2025, made 100 percent bonus depreciation permanent for qualifying property, including new and used business aircraft acquired after 19 January 2025, and repealed the phasedown that was stepping it down. The American version carries its own condition: more than 50 percent qualified business use in the year the aircraft is placed in service.
What Canada has done is remove a reason for a Canadian operator to look south. Budget 2025 had already removed the federal luxury tax on aircraft from 5 November 2025, a levy of the lesser of 10 percent of the value or 20 percent of the amount above C$100,000. Within a year, both of the largest tax penalties a Canadian buyer carried against an American one have gone.
The questions to put to an adviser
For a buyer holding an aircraft through a Canadian business, the practical questions are narrow:
- Will the aircraft be acquired, and available for use, on or after 15 September 2026, and inside the taxation year intended?
- If it is pre-owned, is the seller at arm's length, and is there any rollover in the chain of title?
- Is the owner a corporation, or an individual or partnership whose deduction is capped at the income the aircraft earns?
- What does the recapture look like at a realistic resale value, not a depreciated one?
- What happens if the enacted legislation differs from the draft?
The title and inspection work behind the second question is covered in how to buy a preowned business jet. The rest belong with a Canadian tax adviser before the purchase agreement, not after delivery.