Budget 2025 for Breweries, Wineries & Cideries: Faster Write-Offs for Buildings, Equipment and R&D

Small Business Tax in BCCorporate Tax (T2) GuidanceBusiness Compliance & Regulations

Dec 4

Federal Budget 2025 quietly made life a lot better for businesses that actually build and make things in Canada.

If you run a brewery, winery or cidery, you were probably already thinking about:

adding tanks or barrels
upgrading your canning or bottling line
expanding production space
investing in better automation and quality control

The new “Productivity Super-Deduction” rules in Budget 2025 are aimed squarely at those kinds of investments. In plain language: for the next few years, you can write off more of your buildings and equipment faster, and certain R&D projects become more attractive from a tax point of view.

This post walks through what changed, and what it could mean if you’re planning to invest in your facility.

Big Picture: What Did Budget 2025 Actually Change?

Budget 2025 introduced a package of measures the government is calling the “Productivity Super-Deduction.” At a high level, there are three pieces most relevant to craft producers:

Immediate expensing (100% write-off) for qualifying manufacturing and processing buildings.
Continued immediate expensing (or enhanced first-year write-offs) for manufacturing machinery and equipment, clean-energy and productivity-enhancing assets.
More generous SR&ED rules – higher limits for the enhanced refundable credit and restored eligibility for certain capital expenditures.

These are federal rules. As long as you meet the criteria, they apply whether you’re in BC, Ontario or anywhere else in Canada.

If you want to read the primary source material, the key Government of Canada Budget 2025 documents are:

Immediate Expensing for Production Buildings

What changed?

Under the old rules, a building used for manufacturing or processing was normally depreciated over many years. In tax terms, it sat in Class 1 with an effective rate of around 10% for qualifying manufacturing/processing buildings. That meant a long wait to recover the cost through tax deductions.

Budget 2025 introduces a temporary 100% first-year write-off for eligible manufacturing and processing buildings and qualifying improvements. In practical terms:

If your new or improved building qualifies, you can deduct the full cost in the first year it’s used for production, instead of spreading it over decades.

What counts as an “eligible” building? (simplified)

The building (or addition/alteration) must be acquired on or after Budget Day 2025.
It must be used for manufacturing or processing before 2030.
At least 90% of the floor space must be used to manufacture or process goods for sale or lease.

There is a phase-out after 2030, but the main takeaway for planning is: there’s a window between now and 2030 where qualifying production buildings can be fully expensed much faster than before.

What this looks like for a brewery or winery

Some examples of projects that may fall into this category if they meet the 90% test and other conditions:

Building a new production facility where almost all the space is brewhouse, cellar, packaging and warehousing.
Adding a purpose-built production wing to an existing building (for example, expanding the cellar or tank farm).
Major structural renovations that convert existing space into dedicated production areas.

On the other hand, buildings that are mostly taproom, restaurant, retail or office space probably won’t meet the 90% production requirement and will continue under the regular building rules.

Why this can be a big cash flow benefit

It’s worth underlining how powerful this can be for cash flow in the early years of a project. When you expense a qualifying building up front, you’re pulling a deduction that would otherwise be spread over decades into the first year of use.

For a growing producer, that can mean:

a significantly lower tax bill in the first year the expansion is in service,
more cash left inside the corporation to fund working capital (raw materials, packaging, payroll), and
a better buffer against the inevitable hiccups that come with ramping up new capacity.

You still spend the same dollars on construction or renovations, but instead of waiting 20+ years to recover that cost through small annual CCA claims, you may be recovering a large portion immediately through reduced tax. That extra after-tax cash in year one and year two can be the difference between constantly leaning on your operating line and actually having room to breathe while the new capacity ramps up.

Faster Write-Offs for Equipment and Productivity Assets

The “super-deduction” doesn’t stop at buildings. Budget 2025 also confirms and extends immediate expensing and accelerated write-offs for a range of assets that are very common in breweries, wineries and cideries, including:

Manufacturing and processing machinery and equipment – tanks, brewhouse equipment, pumps, bottling and canning lines, conveyors, pasteurizers, filtration, etc.
Clean energy and energy-efficient equipment – for example, certain heat-recovery or energy-saving systems that qualify under the clean energy classes.
Productivity-enhancing assets – things like data network infrastructure, certain software and IT equipment, process monitoring and control systems.

Depending on the asset, the rules may allow a full 100% write-off in year one, or an enhanced first-year deduction that is significantly higher than the old straight-line CCA rates.

Why this matters if you’re upgrading your line

Suppose you’re looking at:

a new canning line,
additional tanks and glycol capacity, or
better automation on your packaging line.

With the current rules, a much larger portion of that spend can reduce your taxable income immediately. That doesn’t change the cash you hand over to the supplier, but it does change the timing of the tax savings and the after-tax cost of the project.

In other words, if a project made sense on a pre-tax basis before these changes, it is now more attractive on an after-tax basis.

SR&ED: Better Support for Process and Product R&D

The other piece of Budget 2025 that matters for craft producers is the upgrade to Canada’s Scientific Research & Experimental Development (SR&ED) program.

Key changes in Budget 2025 (high level)

The expenditure limit for the enhanced 35% refundable SR&ED credit is being increased from $3 million to $6 million of qualifying expenditures per year, with updated phase-out thresholds.
Certain capital expenditures related to SR&ED are being restored as eligible costs, both for the deduction and the investment tax credit.
There is a push toward more predictable administration (for example, pre-claim reviews and more risk-based audits).

For most small and mid-sized breweries and wineries, you may never hit a $6 million SR&ED budget. The more practical point is that the program is becoming more generous and more usable for businesses that are actually doing real development work.

What might count as SR&ED in your world?

SR&ED is not just white lab coats and patents. The bar is higher than “normal” product development, but many producers underestimate what could qualify. Examples that might be SR&ED if properly structured and documented include:

Developing a new filtration or pasteurization process to improve shelf life without harming flavour, where the outcome was uncertain and you had to experiment.
Experimenting with new can seam designs or packaging materials to fix a technical problem (for example, oxygen pickup, leaking seams).
Designing and testing a control system that stabilizes fermentation conditions in a way that isn’t standard and required meaningful trial and error.

The details matter a lot here. Not every “new beer” or “new release” is SR&ED. But if you are genuinely pushing into technically uncertain territory with a systematic process, there may be a claim worth exploring.

Why SR&ED matters specifically for craft brewers and small producers

For a lot of craft breweries and smaller producers, the instinct is: “SR&ED is for big labs and tech companies, not for us.” That’s often not true. The program exists to support productivity and innovation across the economy – including manufacturing and processing businesses like breweries, wineries and cideries.

Some very common “small” projects that can add up over time:

Upgrading your brewhouse or cellar process to reduce oxygen pickup, improve consistency, or cut energy use, where you actually have to test and tweak the process to get it right.
Developing a new product line where the technical side is non-trivial: for example, shelf-stable RTD cocktails, low- or no-alcohol products, or heavily fruited beers where stability is a real challenge.
Implementing a new CIP/cleaning regime or sanitation process to tackle a persistent quality issue, where you genuinely don’t know at the start which approach will work.
Integrating automation and control systems into older equipment and having to experiment to achieve consistent results (rather than simply buying a turnkey solution and pressing “go”).

Individually, these projects might not feel like “capital-R Research”. But when you step back and look at them as structured attempts to solve technical problems – with hypotheses, trials, failures and documentation – they often fit much closer to the SR&ED criteria than most owners realise.

The important point is that eligible SR&ED costs include things you’re already spending money on: a portion of wages, contractor fees, materials consumed in experiments, some overheads, and now certain related capital costs. If you’re doing this kind of work anyway, the program is designed to put some of that spend back into your pocket so you can keep improving.

How a Craft Producer Can Use These Rules in Practice

Think in projects, not isolated purchases

Instead of looking at each asset separately (“we’re buying a new tank,” “we’re doing a small renovation”), it helps to think in terms of whole projects:

Building / facility project: Are we adding or renovating production space in a way that might meet the 90% manufacturing use test?
Equipment project: Are we upgrading or automating a full part of the process (for example, cold side, packaging, cellar), and does that fit within the immediate expensing rules?
R&D / improvement project: Are we changing a process or product in a way that involves real technical uncertainty and a systematic test-and-learn approach?

Pulling those three threads together before you sign contracts lets you:

estimate the total tax deductions in year one vs. future years,
line up any SR&ED claim that might exist, and
present a cleaner case to your bank or investors.

Timing really matters

Because the building expensing rules are temporary and tied to when a building is first used for manufacturing/processing, the timing of your expansion can have a large impact on the tax profile.

If you already know you want to expand or build within the next 5–7 years, it may be worth looking at whether bringing that project forward (or at least phasing it) makes sense within the current window rather than just drifting into it.

Practical Next Steps for Breweries, Wineries & Cideries

If you’re even vaguely thinking about growth or upgrades over the next few years, here are some concrete steps:

Make a simple capex roadmap. List the building, equipment and automation projects you’re considering over the next 3–7 years, even if they’re rough.
Flag which projects are “mostly production.” Anything where the space is almost entirely tanks, barrels, packaging or warehousing is worth looking at for the building expensing rules.
Identify any truly experimental work. If you’re attacking a technical problem with structured experiments (not just trying a new hop), note it as a potential SR&ED project.
Have someone model the tax impact. A simple projection comparing “old rules” vs. “new rules” can change how you prioritize projects or how you present them to lenders and investors.

How I Can Help

If you’re a brewery, winery or cidery in BC and you’re planning to expand, upgrade equipment or tackle process improvements, it’s worth understanding how these rules apply to your specific plans before you start signing contracts.

I work with owners to:

map upcoming building and equipment projects to the new expensing rules,
spot potential SR&ED projects hiding inside process and quality improvements, and
build a straightforward tax and cash-flow view you can share with banks or investors.

If you’d like to walk through a planned project and see what Budget 2025 might mean in dollar terms for your facility, you can book a short call with me here: https://www.agatebaybookkeeping.com/contact.

Disclaimer: This post is for general information only and is based on federal Budget 2025 proposals as of the date of writing. The final legislation and your specific facts matter. Talk to a professional advisor before making decisions.

Corporate Tax Filing BCT2 Corporate Tax ReturnsSmall Business Accounting BCBusiness Compliance CanadaCRA & Canadian Government GuidanceBudget 2025 Productivity Super-DeductionSR&ED Canada 2025

spencer pallard