Budget Expands Farm Machinery Tax Write-Off
Federal budget lets businesses immediately write off 100 per cent of eligible farm equipment bought from September 15, 2026.
Updated on Nov. 6, 2026 in Agriculture
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The Liberal government's federal budget allows businesses to immediately write off 100 per cent of the cost of eligible capital acquired on or after September 15, 2026, including tractors, combines, seeders, sprayers and farm buildings. Farms, however, are excluded from the new Canada Growth Incentive capital gains tax break.
Why it matters
Finance Canada says the measure lowers the marginal effective tax rate on new agricultural and fishing investments to -6.0 per cent, a change intended to encourage equipment purchases across Canada's farm sector. The exclusion of agriculture from the capital gains incentive means farm owners will not receive the same relief as other sectors.
The budget projects a 2026-27 federal deficit of $62.3 billion, or 1.8% of GDP, and sets the marginal effective tax rate on new agricultural capital investment at -6.0 per cent. It does not estimate how much new farm equipment spending the write-off will produce.
The players
Finance Canada
The federal department responsible for national fiscal policy, which published the budget's projections and the tax-rate analysis for agricultural investment.
The details
Eligible assets include tractors, combines, tillage equipment, seeders, sprayers, balers, trailers, greenhouses and frame, log or corrugated metal barns used for farming. The budget also expands the tax-deferred intergenerational rollover of farm and fishing property to include transfers to nieces, nephews, grandnieces and grandnephews, effective for transfers on or after January 1, 2027.
Timeline
September 15, 2026: Immediate machinery write-off eligibility begins for capital acquired on or after this date.
January 1, 2027: Expanded intergenerational farm rollover takes effect.
2027-28: Funding for the Wine Sector Support Program renewal begins.
Market Landscape
The budget extends existing farm succession rules through the intergenerational rollover while keeping the 2026 Lifetime Capital Gains Exemption for qualified farm property at $1,275,000. Agriculture's exclusion from the Canada Growth Incentive places farm capital gains outside the newer relief available to other Canadian sectors.
Farmers buying tractors, combines, seeders or sprayers on or after September 15, 2026 may deduct the full cost immediately, lowering their tax bill in the year of purchase. Families planning to pass farm property to nieces, nephews or grandnieces and grandnephews can use the expanded rollover for transfers on or after January 1, 2027.
The takeaway
Farm operators should review equipment purchase timing against the September 15, 2026 eligibility date, since the immediate write-off can materially change the after-tax cost of new machinery.
What happens next
The write-off applies to eligible acquisitions beginning September 15, 2026, and the expanded farm rollover takes effect January 1, 2027.
Further reading
For more on how federal policy shapes the sector, see Agriculture coverage across Canada.
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