Financing equipment isn’t just about getting the tools you need to grow — it can also come with some big tax advantages for Canadian businesses. The key is understanding how these benefits work so you don’t leave money on the table.
When you finance equipment, the interest you pay on the loan or lease is often tax-deductible. Same goes for certain financing fees. That means part of your cost can come back to you at tax time.
In Canada, most business equipment qualifies for something called Capital Cost Allowance. Basically, you can write off a portion of the equipment’s value each year as it depreciates. Financing doesn’t change this — you still get the same write-offs as if you paid cash.
If you choose to lease, your monthly payments are usually considered an operating expense. That means you can deduct the full payment (not just interest) when you file taxes. This can lower your taxable income and improve cash flow.
The real benefit is this: financing lets you spread out the cost while still unlocking tax write-offs. Instead of tying up cash in a big purchase, you keep more money available for payroll, fuel, or taking on new jobs — while still reducing your tax bill.
Bottom line: Financing equipment can give you both the tools to grow and the tax breaks to keep more money in your pocket. Always check with your accountant to make sure you’re taking full advantage of the write-offs available to you.