- How long will this machine earn? Long life favours owning (cash or financed). Short or uncertain life favours leasing.
- What does your cash runway look like after the purchase? If the honest answer is “thin,” financing or leasing wins regardless of the interest math.
- What does your tax year need? A year pushing past the small business deduction limit might want the accelerated CCA of a purchase; a thin year might prefer the steady deduction of lease payments. This is exactly the kind of timing decision that belongs in the fall planning conversation, not the dealership.
- Is the utilization real? A machine used forty days a year is a rental, not a purchase, no matter how the ownership math looks. Run the hours honestly before running the financing numbers.
Don’t forget the HST
On a purchase, you pay HST up front and recover it as an input tax credit — a real but temporary cash-flow hit worth planning around on six-figure equipment. On a lease, HST applies to each payment instead, spreading the same cost out. Neither is “cheaper,” but on tight cash, the lease’s spread-out HST is one more point in its favour.
Frequently asked questions
Is it better to lease or finance a truck for my business?For a work truck you’ll keep five-plus years, financing usually wins: you build equity, claim CCA, and avoid the lease’s built-in premium and kilometre limits. Leasing suits shorter cycles or when preserving borrowing room matters more. Note that passenger vehicles have their own capped CCA and lease deduction limits — the math is different from heavy equipment, so run it per vehicle.
Can I write off equipment the year I buy it?Usually a large share of it, not all. Accelerated CCA rules front-load the first-year deduction well beyond the old half-year treatment, and certain classes do better still. The exact percentage depends on the class and the rules in force at purchase — confirm before you count on it in your tax projection.
Should I buy equipment through my holding company?Sometimes — owning equipment in a separate entity and renting it to the operating company can protect the asset from operating risk. It adds complexity, intercompany agreements, and HST registration questions, so it’s worth doing properly or not at all. This pairs with the structure conversation from our holding company post.
The dealer offered 0% financing. Is that really free money?Rarely. Zero-percent offers are usually funded by a price you could otherwise negotiate down, or by fees in the contract. Price the machine as a cash deal first, then compare the dealer’s financing against your bank’s equipment loan on the real number.
How does new equipment change what I charge?Directly. The machine’s full cost — payment or depreciation, insurance, maintenance, fuel — should flow into an internal hourly or daily rate charged to every job that uses it. Buy the machine without raising the rate, and the “profitable” purchase quietly becomes margin leakage across every job it touches.
The right answer is a spreadsheet with your actual cash position, utilization, and tax year in it — which is a half-hour exercise with current books. YBL runs equipment decisions with contractors across Ontario as part of the virtual CFO seat: structure compared, CCA modelled, and the machine priced into your rates so it earns its keep. Before you sign at the dealership, talk to us.