The 2025 federal budget introduced a major incentive that could reshape how investors and manufacturers approach industrial real estate across Ontario.

Under the new rules, qualifying manufacturing buildings where at least 90% of the square footage is used for manufacturing and the structure was built after 2007 are now eligible for a 100% capital cost allowance (CCA) deduction in the first year.

Previously, most buildings could only claim a 4% CCA, and manufacturing buildings qualified for 10%. Now, businesses can fully expense the purchase in year one.

Here is what that looks like in practice:

• $3,000,000 building purchase
• 100% CCA deduction = $3,000,000 write-off
• At a 25% corporate tax rate → roughly $750,000 in immediate tax deferral

Keep in mind that this is a deferral, not a permanent savings. You will need to recapture the CCA when the building is sold. However, the short-term tax efficiency can significantly improve cash flow and return on investment.

Additional Ontario Incentives

Alongside the federal change, two provincial programs sweeten the deal for Ontario manufacturers and investors.

1. Ontario Regional Opportunities Investment Tax Credit (ROITC):
   • 10% refundable tax credit on eligible building purchases or additions ($50K–$500K range, up to $45K credit)
   • Available in regions such as Windsor-Essex
   • Only for Canadian-controlled private corporations (CCPCs)
2. Ontario Made Manufacturing Investment Tax Credit (OMMITC):
   • 10% refundable (proposed to increase to 15%) credit on manufacturing buildings and equipment
   • Up to $20M in annual eligible purchases across a corporate group
   • Currently for CCPCs, but the province has proposed extending a non-refundable version to non-CCPCs

What This Means for Windsor-Essex

With industrial demand continuing to rise, fueled by the NextStar battery plant, auto sector retooling, and cross-border logistics, these tax programs provide a powerful incentive to invest locally.

A Windsor-based manufacturer purchasing a new $3M facility could see:

• $3M immediate deduction (approximately $750K tax deferral)
• $45K ROITC credit
• $300K–$450K OMMITC credit

That is nearly $1.2 million in combined tax advantages.

For local manufacturers, investors, or developers evaluating new builds or acquisitions, this is a moment worth exploring carefully with your accountant and real estate advisor.

Lalovich Real Estate specializes in Windsor-Essex industrial and investment properties.
We would be happy to walk you through these new incentives and what they could mean for your next acquisition or expansion.

Note: We are not accountants. The above summary is based on information provided by our accounting partners. Always verify details with your own tax professional before making financial or tax decisions.