Canada goes 100% on bonus depreciation
The policy was announced on September 15th, 2026.
Canada is allowing business aircraft bought on or after September 15th, 2026, to claim full 100% depreciation deduction. Until recently, buyers could deduct only 25% of an aircraft’s value each year.
But under the new Productivity Mega Deduction policy, aircraft owners can deduct the entire value in year one. This is a stark shift in policy.
Stan Kuliavas, vice president, Sales and Business Development at Levaero, the exclusive Canadian dealer for Pilatus has watched the policy landscape shift over several years. “Four years ago, our government brought in a luxury tax on aircraft. And this month it put aircraft on a list of productivity assets, next to fibre, pipelines and rail – that’s quite a turnaround,” he tells us.
Ehsan Monfared, managing partner, YYZ Law says the firm made a submission to the House of Commons Standing Committee on Finance. They pushed for exactly this kind of accelerated write-off, he tells us. “We recommended that Canada adopt a very broad 100% depreciation, or immediate expensing,” he says.
Monfared says the goal of 100% deduction was to put Canadian buyers “on an equal footing” with the US has existed. The Canadian government “moved very quickly” and went beyond what the industry asked, he adds.
To qualify, the aircraft should be acquired on or after September 15th and it must be available for use and ready to fly for business. The existing case law on capital cost allowance (Canadian tax term for depreciation) sets a two-part test, says Monfared.
First, the property must be acquired. Just a contract for a jet that hasn’t been built doesn’t count. The second test is that the jet must be usable and not sitting in completion or refurbishment when the tax year ends.
Pre-owned jets also qualify. But the buyer or company purchasing shouldn’t have owned it before. It mustn’t also have been acquired through a tax-free transfer between related companies.
Kuliavas says the permanence is what sets this apart from other incentives. “Temporary incentives push people and companies to buy against the deadline – and rush aircraft purchases are rarely good ones,” he adds.
The deduction announcement comes a year after Canada scrapped its luxury tax on aircraft. The luxury tax was worth a flat 10%. “That was a big nut,” says Monfared. “[The deduction] is more of a signalling exercise than a substantive saving,” he says.
However, he expects real market movement from this policy. US business aircraft numbers grew roughly 20% after 100% depreciation was announced. Monfared expects the Canadian numbers to grow faster. “We’re likely going to see in the order of about 10 to 20% [growth] per year,” he says, for the next three or four years.
Kuliavas also highlights the longstanding investment gap as further context for why this policy on deduction matters. “In 2023, Canadian firms were investing almost $0.41 in machinery and equipment for every dollar US companies were. That’s a huge gap, and legislation like this takes aim at it,” he says.
