The December machine question
A machine that is delivered and working before your fiscal year-end starts its CCA clock a full year earlier than the same machine landing two weeks later. That is the available-for-use rule, and it quietly makes delivery dates a tax variable worth negotiating with the dealer. The caveats matter as much as the move. A deduction is a discount, not a rebate: buying iron the operation does not need spends ninety-cent dollars to save roughly twelve-cent tax at the small-business rate. And because first-year acceleration rules have shifted in recent federal budgets, we confirm the current multiplier against your year-end before the order is signed. One more lever hides in plain sight: CCA is permissive, not mandatory, so in a loss year you can claim less than the maximum and bank the room for the years when loan payments outrun the deductions. Tax Planning & Advisory exists for exactly this kind of decision, made before the year closes rather than narrated afterward.
Loan, lease or cash: three tax shapes for one dozer
The same dozer creates three different tax and balance-sheet patterns depending on how it is paid for, and the right answer depends on cash, credit and the thresholds in the next section.
| Tax shape | Financed purchase | Lease | Cash purchase |
|---|---|---|---|
| What you deduct | CCA plus loan interest | Lease payments as incurred | CCA only |
| Balance sheet | Asset and debt both on | Often neither, depending on terms | Asset on, working capital gone |
| Watch for | Payments outlasting the big CCA years | A buyout that is really a purchase | No cash left for the season's start-up |
The trap inside financed iron is the crossover year. Declining-balance CCA shrinks every year while the loan payment stays flat, so taxable income climbs in years three and four with no new cash behind it. We map that curve for every financed machine so the tax bill in the lean CCA years is funded, not discovered.
The thresholds a fleet crosses before revenue does
The small-business deduction starts grinding away once taxable capital employed in Canada passes $10 million, and it is gone entirely at $50 million. Taxable capital counts debt as well as equity, which is why a debt-financed fleet can reach the line years before revenue suggests it should: several financed machines plus accumulated retained earnings add up fast. Leasing rather than borrowing is one lever, dividend policy is another, and both work better chosen deliberately than discovered on assessment. The passive-income grind is a separate gate: once a corporation's investment income passes $50,000, the same small-business limit starts shrinking, which shapes where surplus cash should sit between machine purchases. Neither threshold announces itself in advance; both tend to surface two years into a growth run, so we recalculate them every time a machine joins the fleet.
Selling iron is a taxable event you can schedule
Sell or trade a machine for more than the undepreciated capital cost in its class and the excess comes back into income as recapture, fully taxable that year, and a trade-in counts as a disposition at the trade allowance. Because you usually control the timing, recapture is one of the most plannable numbers in the company: stagger disposals across year-ends, pair a sale with a heavy-CCA addition, or let the class absorb it. The endgame deserves the same treatment. A share sale of a qualifying small business corporation can use the $1.25 million lifetime capital gains exemption, but a company padded with surplus cash and investments can fail the asset tests, and cleaning that up takes years, not weeks. Corporate Restructuring is how the company gets purified long before a buyer ever calls.
Paying yourself from a capital-heavy company
When the corporation needs retained earnings for the next down payment, owner pay is a planning decision, not a habit. Salary creates RRSP room and the steady T4 income that equipment lenders and mortgage underwriters like to see; dividends are simpler and more flexible in a lumpy year. Most excavation owners land on a deliberate mix, reviewed annually against the fleet plan rather than set once and forgotten. A spouse on the payroll must be paid for work actually done, since TOSI rules police the rest. All of it is the brand line in practice: your accountant files your taxes, we help you decide.
