How Equipment Purchases Can Reduce Your Taxes: A Quick and Easy Guide for Compounders

What if you could give your future self a tax break? What if you could make a decision now that would save your business money later on? As the end of 2026 approaches, now is the time to get in your tax-deductible purchases. For many compounding pharmacies, equipment is a necessary expense that can quickly add up. Fortunately, pharmacy equipment is one of those business expenses that can be tax-deductible. Here’s what you need to know to benefit from equipment tax breaks.

How can equipment purchases reduce my taxes?

The Government of Canada recently announced the Productivity Mega Deduction which allows for the immediate expensing of new machinery and equipment purchased on or after September 15, 2026.  There is no cap and no expiration date.

Medisca Chief Financial Officer Mitchell Rubin comments on this opportunity:

“While end of year can be a hectic time, it’s also a great opportunity for pharmacy owners to reflect and ask themselves - Could my pharmacy benefit from new technology or equipment next year? "

Takeaway here — make sure you purchase your equipment in advance to ensure it is in use before the end of the year and consult with your supplier representatives on lead times. 

Can you give me an example of tax-deduction savings?

• My pharmacy’s gross income is $1,000,000.
• My pharmacy’s cost of goods sold and operating expenses (e.g., purchases, office supplies, insurance, and salaries) is $700,000.
• My pharmacy’s taxable income is $300,000 (calculated as $1,000,000 minus $700,000).
• My pharmacy’s qualified equipment purchases this year total $50,000. I could deduct 100% of this amount bring the income down to $250,000 (calculated as $300,000 minus $50,000). You only have to pay taxes on this new amount.
• By not having to pay taxes on the $50,000 invested in equipment, your pharmacy can save a total of $13,500 based on an average Federal and Provincial Corporate Income Tax Rate of 27% ($50,000 x 0.27)*.

How soon can I benefit from tax savings?

The shorter the time between the purchase and filing your taxes — the quicker the savings. Purchasing equipment at the end of the fiscal year means you only need to wait a few months until you file your corporate income tax returns to see the benefit.

What equipment qualifies for tax deduction?

The machinery and equipment must be new and purchased on or after September 15, 2026 in order to qualify for immediate expensing.  It is recommended that you consult with your tax advisor for further details.

*The tax savings refers to the amount a business would save in taxes by deducting the full equipment cost from their taxable income, which is permissible according to the CRA's accelerated CCA. Tax rate differs per province and corporate size. Note that this is for demonstration purposes only and should not be relied on as tax advice.

*The content of this webpage is for informational purposes only of a general nature and does not address the circumstances of any particular individual or entity. Nothing contained herein shall be considered financial advice and should not be relied on. You should seek independent financial and taxation advice to validate how the information contained herein relates to your unique circumstances.