Every machine lands in a class before it lands on the floor
Capital cost allowance is not one rate; it is a map, and shop equipment scatters across it. Machinery bought primarily for manufacturing and processing has carried its own accelerated class with enhanced first-year claims, and both the class and the enhancement turn on when the asset is acquired and when it becomes available for use — date-sensitive rules we confirm before the order is signed, not after.
| Shop asset | Where it usually lands |
|---|---|
| CNC router, edgebander, wide-belt sander | The accelerated manufacturing-and-processing equipment class; the first-year claim depends on acquisition and in-service dates |
| Spray booth and make-up air built into a leased shop | Class 13 leasehold improvements, written off straight-line over the lease term |
| Delivery van and install truck | Class 10 at 30% declining balance |
| Computers running the nesting and drawing software | Class 50 at 55% |
| Hand tools under $500 | Class 12 — fully deductible in the year of purchase |
The calendar point is worth real money. A CNC commissioned and cutting in the last week of the fiscal year claims CCA a full year earlier than the same machine still crated in January. Delivery dates are negotiable; so, therefore, is your deduction.
The booth deserves its own line of thinking. Built into a leased shop, it is a Class 13 leasehold written off straight-line over the lease term — which means the length of the lease you sign quietly sets the speed of the deduction, and a booth going into a five-year lease deducts very differently than the same booth in a unit the corporation owns. That conversation belongs at lease negotiation, not at year-end.
Lease, loan or cash is a tax profile, not just a payment
A leased edgebander deducts its payments as they are made; a financed one deducts CCA plus interest, front-loaded when the class is generous. The two profiles rarely match, and the better answer depends on the shop's rate, the year's other deductions and what the balance sheet needs to show the next credit application. Business Financing Advisory and the tax plan get built together here, so the lender file and the CCA schedule agree instead of arguing.
An apprentice at the bench is a credit on the T2
Cabinetmaker is a Red Seal trade, which makes a registered first- or second-year apprentice an eligible apprentice for the federal Apprenticeship Job Creation Tax Credit: 10% of eligible wages, to a maximum of $2,000 per apprentice per year, claimed as an investment tax credit on the corporate return, with unused amounts carrying back three years and forward twenty. A shop training two apprentices leaves up to $4,000 a year unclaimed simply by not asking — the supporting paperwork is the apprenticeship registration you already hold.
Owner pay in a year the shop bought iron
A heavy CCA year can shelter most of the corporation's income, and that changes the salary-dividend arithmetic. Ontario's combined small-business rate of roughly 12.2% on the first $500,000 rewards leaving profit inside to fund the next machine; salary still builds RRSP room and gives an equipment lender a clean income line to underwrite; dividends may suit a year the CCA has already done the sheltering. Family members on the payroll must be paid what the work is worth — shop drawings, scheduling and purchasing are real jobs that support real wages — while dividends to family who do not work in the business run into the tax on split income at top rates. We re-run the mix every year inside Tax Planning & Advisory, against the shop's actual capital plan rather than a rule of thumb.
The year-end levers a shop actually holds
Three moves before the year closes. Count the racks and write off the dead stock — discontinued door profiles, orphaned hinges, the melamine nobody will spec again — because a write-down without count records is a deduction the CRA can refuse. Time the machine delivery against the fiscal year, in either direction. And revisit the reserve on unearned deposits with the job schedule in hand, since the deferral flows through the return our Corporate Tax Filing team prepares.
One cash warning that catches growing shops: the first year the corporation posts a real profit, the CRA's instalment system catches up the year after, and quarterly corporate instalments start landing in the same months as machine payments. We put the instalment schedule into the capital plan so neither surprises the other. Planning engagements are quoted in writing after a free 15-minute discovery call, for cabinet and millwork shops across Mississauga and the GTA.
