Andrei Fomitchev If a firewall replacement, a switch refresh or a server upgrade has been sitting on your list for a year or two, the federal government just changed the math on it. On September 15, 2026, Ottawa announced the Productivity Mega Deduction, and most of the equipment that protects and runs a business network falls inside it.
This post explains what the deduction is, which IT and security purchases it covers, what it is worth in real dollars, and the timing rule that decides whether a purchase counts this year or next.
The short answer: the Productivity Mega Deduction lets a business deduct 100% of the cost of eligible new equipment in the year it is put into use, instead of writing it off over many years. Firewalls, network switches, servers, computers and software all qualify. The equipment must be acquired on or after September 15, 2026, and the deduction lands in the tax year the equipment is installed and working, not the year it was ordered.
A FortiGate firewall or FortiSwitch that used to be written off at 30% a year can now be written off in full in year one. The tax saving arrives this year instead of trickling in over the better part of a decade, which lowers the real cost of security upgrades you were going to make anyway. The rules are still draft legislation, so confirm with your accountant before you buy.
Productivity Mega Deduction (PMD)
A proposed, permanent federal tax measure announced on September 15, 2026 that allows businesses to deduct the full cost of most new depreciable property in the year it becomes available for use, instead of claiming capital cost allowance (CCA, the tax version of depreciation) a portion at a time over several years.
What is the Productivity Mega Deduction?
The Productivity Mega Deduction is permanent immediate expensing for capital purchases. According to the Department of Finance announcement, it applies to capital property acquired on or after September 15, 2026, and lets the business write off the full cost in the year the property becomes available for use.
Under the normal rules, equipment goes into a CCA class and you deduct a fixed percentage of the remaining balance each year. That spreads the tax benefit over many years. The new measure collapses all of it into year one.
A few points from the announcement and the draft legislative proposals that matter for IT buyers:
- It is permanent. Unlike earlier temporary measures, there is no planned end date.
- The equipment must be new to you. Property qualifies only if neither you nor anyone not at arm’s length with you has owned it before.
- Corporations, individuals and partnerships can all use it, as DLA Piper’s summary notes. For individuals and some partnerships, the deduction cannot create or increase a loss.
- Some property is excluded, including most buildings, goodwill, licences and franchises, and most passenger vehicles. Excluded property still gets the existing Accelerated Investment Incentive, per Torys LLP.
6.4%
Canada’s marginal effective tax rate on new business investment once the Productivity Mega Deduction applies, compared with 16.9% in the U.S. (Department of Finance Canada, September 2026)
Which IT and cybersecurity equipment qualifies?
Most of the hardware and software that makes up a business network qualifies. The Department of Finance lists Class 46 (data network infrastructure), Class 50 (computers) and Class 12 (software) as eligible. In practice, that covers almost everything on a typical security refresh list.
| Equipment | CCA class | Normal write-off rate | With the Mega Deduction |
|---|---|---|---|
| FortiGate firewalls, FortiSwitch switches, SD-WAN appliances, wireless access points | Class 46 | 30% a year (declining balance) | 100% in year one |
| Servers, desktops, laptops, storage | Class 50 | 55% a year (declining balance) | 100% in year one |
| Application software you buy outright | Class 12 | 100%, normally halved in year one | 100% in year one |
| Security subscriptions (FortiGuard, endpoint protection, Microsoft 365) | Operating expense | Already fully deductible | No change |
| Support, maintenance and managed services | Operating expense | Already fully deductible | No change |
The normal rates come from the Canada Revenue Agency’s CCA class list. The biggest change is for network equipment. Class 46 has one of the slowest write-off rates of anything in an IT budget, so firewalls and switches gain the most.
Subscriptions and support were never the issue. Annual FortiGuard licences, endpoint protection and managed service fees are operating costs and were already deductible in the year you pay them. The Mega Deduction matters for the hardware and software you buy and own.
How much is the deduction worth on a firewall refresh?
The deduction does not make equipment free. It moves the tax saving forward, so you get the full benefit in the first year instead of a slowly shrinking slice each year. For network gear, that is the difference between waiting the better part of a decade and getting it now.
Take a $40,000 network refresh: a pair of FortiGate firewalls in a high-availability setup plus new FortiSwitch switches. The table below compares the deduction you can claim under the Class 46 30% declining-balance rate with the Mega Deduction. It is simplified: it leaves out first-year adjustments under the current rules, which vary by purchase date.
| Year | Class 46 at 30% (deduction) | Cumulative written off | With the Mega Deduction |
|---|---|---|---|
| Year 1 | $12,000 | $12,000 (30%) | $40,000 (100%) |
| Year 2 | $8,400 | $20,400 (51%) | Done |
| Year 3 | $5,880 | $26,280 (66%) | Done |
| Year 5 | $2,881 | $33,277 (83%) | Done |
At the combined federal and Ontario general corporate tax rate of 26.5% (15% federal plus 11.5% Ontario), deducting the full $40,000 in year one is worth about $10,600 in tax that year. Under the old schedule, year one is worth about $3,180, and after five years you still have not claimed the full amount. Your own numbers depend on your tax rate and your income, which is why the next step is a conversation with your accountant.
When do you need to buy and install equipment to claim it?
Two dates matter. The equipment must be acquired on or after September 15, 2026, and the deduction is claimed in the tax year the equipment becomes available for use. A firewall ordered in November and installed after your year end counts for next year, not this one.
That second rule is where we see plans slip. A firewall refresh is not a same-week job. When we replace a FortiGate for a client, the work runs in this order: confirm the right model for current throughput and growth, order the hardware, rebuild and test the configuration (policies, VPNs, SD-WAN rules) on the new unit, then cut over in a maintenance window that does not disrupt the business. Hardware lead times and year-end change freezes add to that.
If your fiscal year ends December 31, a refresh you want to count for 2026 needs to be scoped in October or early November. Leaving the order until mid-December puts the year-one deduction at risk.
Ask your IT provider for a written in-service date before you sign the purchase order, and give that date to your accountant. “Available for use” is the test, so the date the equipment went live is the one that matters at tax time.
Which security upgrades should you prioritize?
The deduction is a reason to do necessary work sooner, not a reason to buy equipment you do not need. Start with the gear that is already a risk. In the FortiGate estates we manage, three things come up again and again:
- Firewalls on unsupported software. FortiOS 7.2 reached end of support on September 30, 2026 (see Fortinet’s product life cycle page). Some older FortiGate models cannot run the newer versions at all, which means the hardware itself has to go. We cover the risks in the real cost of running outdated FortiGate models.
- Firewalls that are undersized. A unit bought for 30 staff and a few cloud apps often struggles once security inspection is switched on for 80 staff. Our guide to sizing a FortiGate explains how to check.
- A single firewall with no backup. If the business stops when the firewall fails, a second unit in a high-availability pair is the cheapest uptime insurance you can buy, and it qualifies for the same deduction.
After that, look at switches with no remaining vendor support, servers at the end of their warranty, and staff laptops that cannot run current versions of Windows or your security tools.
How do you build the business case before year end?
The fastest path is a short equipment review that gives your finance team a list with three things on it: what is at risk, what it costs to replace, and when it can be live. Here is the process we use with clients.
List what you have: every firewall, switch, access point and server, with model, software version, warranty date and support status.
Flag the risks: anything out of vendor support, unable to run current software, near capacity, or without a backup unit.
Price the replacements: hardware, installation and the first year of security subscriptions, kept on separate lines because they are treated differently for tax.
Set in-service dates: work back from your fiscal year end so every item is installed and working in time.
Review it with your accountant: confirm which items qualify for your business and what the deduction is worth at your tax rate.
Splitting the quote into hardware, installation and subscriptions matters. The hardware is what gets the new year-one deduction. Subscriptions and support were already deductible, and your accountant will want to see them separately.
Is the Productivity Mega Deduction law yet?
No. As of October 2026 it is a proposal published as draft legislation, and the details may change before it is enacted. The proposed start date, September 15, 2026, is already set, so purchases made now are the ones it is written to cover. Final eligibility depends on the enacted rules and your own situation.
This article explains the announced measure in plain terms for IT planning. It is not tax advice. Confirm with your accountant or tax advisor how the deduction applies to your business before you make a purchase decision based on it.
The Productivity Mega Deduction turns a slow, multi-year write-off for firewalls, switches and servers into a full deduction in year one. If you already know your network needs work, the deduction makes this the year to do it. Just make sure the equipment is installed and working before your fiscal year end.
BALANCED+ has been a Fortinet partner since 2003 and now holds Advanced Partner status. If you want a clear list of what in your network is due for replacement, what it would cost and when it could be live, book a security equipment review with our team. You can see how we design and run these environments on our Fortinet solutions and managed firewall services pages, or plan the bigger picture with our vCIO and IT roadmapping service.
Sources
- Government of Canada introduces new Productivity Mega Deduction, Department of Finance Canada, 2026
- Draft legislative proposals: immediate expensing, Department of Finance Canada, 2026
- Classes of depreciable property, Canada Revenue Agency
- Canada’s Productivity Mega Deduction: what businesses need to know, DLA Piper, 2026
- Productivity Mega Deduction, Torys LLP, 2026
- Corporation tax rates, Canada Revenue Agency
- Product life cycle, Fortinet
Adrian Carmichael 
