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TORONTO — Prime Minister Mark Carney is introducing a new tax incentive aimed at boosting business investment by allowing companies to immediately deduct a much broader range of capital costs.
Carney announced the Productivity Mega Deduction on Monday at the Canada Investment Summit in Toronto.
The federal government says the measure will expand the share of eligible assets covered by immediate expensing from about 15 per cent to more than 65 per cent.
Eligible investments will include fibre-optic cable, mining property, oil and gas pipelines, software, research and development, computer equipment, aircraft, vehicles, patents, rail track, bridges and roads.
The new measure builds on the Productivity Super-Deduction introduced in Budget 2025, which allows businesses to immediately deduct 100 per cent of the cost of eligible investments in machinery, equipment and technology.
The government also says immediate expensing will be made permanent.
Ottawa says the changes will reduce Canada’s marginal effective tax rate on new business investment from about 13 per cent to 6.4 per cent.
The federal government says that would give Canada the lowest rate among major economies and put it at less than half the rate in the United States.
Carney says the changes are intended to strengthen Canada’s competitiveness and encourage companies to build and expand in the country.
Finance Minister François-Philippe Champagne says the measure represents one of the most significant changes to Canada’s business tax system in decades and is designed to support large-scale investment.
The Canada Investment Summit is being hosted by the federal government in partnership with CPP Investments and the Public Sector Pension Investment Board.
Ottawa says about $280 billion in government capital investments and incentives over five years are expected to help generate more than $1 trillion in total investment from public, private and institutional partners.
Under Canada’s capital cost allowance system, businesses normally deduct the cost of depreciable assets over time.
Immediate expensing allows the full cost of an eligible investment to be deducted in the first year the asset becomes available for use.
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