How Budget 2025’s enhanced capital cost allowance is creating a powerful window for manufacturers to modernize, and how leasing helps them maximize every advantage.
A Turning Point for Canadian Manufacturers
Canadian manufacturers are facing a period of significant pressure. Skilled labour shortages, rising input costs, and slowing productivity growth are creating real challenges on the shop floor. Statistics Canada reports that machinery and equipment prices have climbed more than 9 percent over the past two years, making modernization more expensive and more difficult to justify.
Budget 2025 has shifted the landscape. With the introduction of a 75% first-year Capital Cost Allowance on eligible manufacturing and processing equipment, companies now have access to one of the most advantageous tax incentives in more than a decade. This creates a rare and time-sensitive opportunity to upgrade machinery, automation systems, and production technology at a significantly lower after tax cost.
But many manufacturers still face the same dilemma. They want to modernize, yet committing large amounts of capital during uncertain conditions can strain working capital and slow operational momentum.
Modernization should not require choosing between liquidity and progress. Leasing offers a powerful path forward.
Leasing Helps Manufacturers Capture This Moment With Confidence
Prime Capital helps manufacturers take full advantage of this incentive window through flexible financing structures that preserve cash flow, reduce risk, and keep equipment investments aligned with production needs.
With the right leasing strategy, companies can:
Upgrade equipment now without large upfront payments
Move ahead with CNC machinery, automation tools, material handling equipment, or robotics while keeping capital available for payroll, inventory, and raw materials.
Pair enhanced CCA with predictable monthly costs
Lower the after-tax cost of acquiring new equipment while gaining the stability of consistent monthly payments.
Align payments with production cycles
Match costs to revenue-generating periods, giving manufacturers more breathing room during lower volume months.
Adopt automation and advanced systems while staying agile
Take advantage of high-impact technology without locking the business into long-term ownership during periods of rapid change.
Avoid long-term debt commitments Preserve borrowing capacity and protect credit lines for future expansion or unexpected needs.
This combination of enhanced CCA and strategic leasing creates a moment manufacturers cannot afford to ignore.
An Example of Smart Modernization
If a mid-sized metal fabrication shop needed to replace an aging CNC machine to keep up with production demand. Purchasing the new unit would have required more than $450,000 upfront, reducing the capital available for labour, materials, and ongoing automation upgrades.
This is where Prime Capital can help by leasing the equipment instead. The company can:
- Secure the CNC unit immediately
- Preserve working capital for operational needs
- Take advantage of the 75% CCA incentive
- Align payments with peak production months
The result was improved capacity, stronger cash flow, and a smoother path to long-term modernization.
This is the type of financial agility many manufacturers need heading into 2026.
Industry Insight: A Stronger Foundation for Modernization
Canada’s manufacturing sector is beginning to stabilize. PMI readings show positive movement, and more companies are exploring automation investments to reduce labour challenges and increase throughput.
However, the enhanced CCA incentive is only available for a limited time. Companies that act during this window will capture the full benefit, while those who wait may face higher equipment prices, tighter lending conditions, or reduced tax advantages.
Leasing provides a tax-aware path to modernization, allowing manufacturers to upgrade quickly without weakening their balance sheets or delaying critical improvements.
The conditions to act are here. The incentive window is open. Momentum favours early movers.
Modern Facilities, Stronger Competitiveness
With the right financial structure, Canadian manufacturers can enter 2026 with more efficient production lines, reduced downtime, and a stronger competitive position. Whether the goal is to expand capacity, reduce bottlenecks, or adopt new automation tools, leasing helps companies move forward with clarity and confidence.
Prime Capital’s expertise ensures manufacturers convert this tax incentive into real performance gains without compromising their financial stability.
Act While the CCA Advantage Is Available
If your team is planning equipment upgrades or exploring automation, now is the time to capture the enhanced CCA opportunity.
Take advantage of this window before it closes. Contact Prime Capital to explore a smarter, more efficient way to modernize your production line.
