Year-end business purchases and the available-for-use rule

Every December, business owners spend money in the last three weeks of the fiscal year expecting it to come off this year's tax bill. A good portion of that spending does nothing for the current year, and the reason is almost always the same rule.

A capital asset gives you a deduction in the year it becomes available for use. Not the year you ordered it. Not the year you paid for it. The year it is delivered, installed and capable of doing the job you bought it for.

Paying for it is not the test

If you write a cheque on December 28 for a machine that ships in February, you get no capital cost allowance in the year you paid. If the machine arrives December 30 and sits in its crate through January, you still get nothing, because it is not available for use. If it arrives December 20, gets installed December 22 and runs a test batch December 23, it counts.

The same logic applies to smaller purchases. A laptop delivered and set up before year end is in. A laptop ordered on December 29 and delivered January 6 is not.

This is the single most useful thing to know about year-end purchasing, and it is the thing most often missed. If a purchase is being made partly for tax reasons, the delivery and installation date is the date that matters, and it belongs in the conversation with the supplier before you place the order.

Why the first year can be worth more than the CCA rate suggests

Once an asset is available for use, the accelerated investment incentive gives an enhanced first-year deduction on most eligible property, and it suspends the half-year rule that would otherwise cut your first-year claim in half. Certain categories, including manufacturing and processing equipment, clean energy equipment and zero-emission vehicles, have carried a full first-year write-off.

The multipliers and the phase-out schedule here have been changed, suspended and reinstated more than once in recent years. Confirm what applies to your fiscal year before you build a purchase decision around it. The structural point holds regardless: the enhanced deduction attaches to the first year the asset is available for use, so missing the date by a week can cost you the whole first-year benefit.

What actually happened to Sarah's $8,500

The example that circulates in year-end articles goes like this. An owner with $120,000 of projected income and a 30% marginal rate spends $8,500 in December on a $2,500 laptop, $1,800 of software subscriptions, $3,000 of office furniture, $1,200 of training and a bit of stock. Tax saved: $2,550.

Now apply the actual rules to that list.

• Laptop, $2,500. Capital. Deductible through CCA, and only if it is delivered and running before year end.
• Furniture, $3,000. Capital. Same test. Furniture ordered in December frequently arrives in January.
• Software subscriptions, $1,800. If the subscription covers the next twelve months, the CRA's prepaid expense rule puts the deduction in the year you get the benefit. Paying in December for a January-to-December term gives you close to nothing this year.
• Training, $1,200. Same treatment. A course that runs in February is a next-year expense regardless of when you paid the invoice.
• Supplies bought to stock up. Unused supplies sitting on a shelf at year end are inventory. The deduction comes when they are used.

The honest current-year number is a fraction of $2,550, and it depends almost entirely on delivery dates. That does not make the spending wrong. It means the tax saving is smaller and later than the pitch suggests.

What still moves in December

• Repairs and maintenance completed before year end. A genuine repair is a current expense. An improvement that betters the asset beyond its original condition is capital, and the line between the two gets argued.
• Equipment you already needed, ordered early enough to be in service. The tax treatment rewards planning in October more than shopping in December.
• Bonuses declared before year end. A bonus accrued at year end is deductible in that year as long as it is actually paid within 180 days. Miss the payment window and the deduction moves.
• Bad debts written off and obsolete inventory dealt with. Neither costs cash and both reduce income.

The buyer's questions

Before any December purchase made with tax in mind:

1. Would you buy this in the first quarter anyway?
2. Can the supplier confirm delivery and installation before your year end in writing?
3. Is this capital or current, and do you know which before it is coded?
4. Does the cash position support it right now?
5. Will the documentation support the claim if someone asks in two years?

Spending a dollar to save thirty cents is a bad trade when you did not need the thing. That is the mistake underneath most of the others: overbuying, buying without comparing, and losing the receipts for the purchases that did make sense.

For contractors, the year-end question is usually equipment and vehicles rather than office furniture, and the available-for-use rule bites harder because delivery lead times on machinery are long. We look at equipment timing for trades businesses as part of the same conversation as the fiscal year end itself.

Purchases are one piece of a wider timing question. The arithmetic behind why moving income and expenses between years is worth anything at all, and the month-by-month view of the last quarter before a year end, are both in deferring income and accelerating expenses. If you are unsure when your fiscal year actually ends and what falls due after it, the CRA deadline checker is a starting point.

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General information only, current at August 2026. Tax rules change and GST/HST status is fact-specific. Confirm your own position before relying on anything here.