Prime Minister Mark Carney has introduced a series of changes aimed at making Canada a more competitive environment for businesses, including a new tax incentive called the Productivity Mega Deduction, announced Monday at the first Canada Investment Summit in Toronto.
The federal government previously introduced a Productivity Super-Deduction in Budget 2025, allowing businesses to immediately deduct 100 per cent of the cost of eligible new investments such as machinery, equipment and technology. The new Productivity Mega Deduction builds on that measure by increasing the amount of assets covered from roughly 15 per cent to more than 65 per cent, including fibre-optic cable, mining property, oil and gas pipelines, software, research and development, computer equipment, aircraft and vehicles, patents, rail track, bridges and roads.
The federal government is also making immediate expensing permanent so businesses can recover costs sooner. As a result, Canada’s marginal effective tax rate on new business investment is expected to fall from roughly 13 per cent to 6.4 per cent.
“Canada has what the world wants. We’re an energy superpower with the most educated workforce in the world and rock-solid fiscal strength. We are capitalising on these strengths and making Canada the best place in the world to invest. With the lowest marginal effective tax rate in the G7 by an order of magnitude, we are sending a clear message to the world: Canada is building big. Build with us,” said Carney.
“This is one of the most significant changes to Canada’s business tax system in half a century, and a game changer for investment in this country. With the Productivity Mega Deduction, we are reinforcing Canada’s position as the most competitive country in the G7 for new business investment and setting the conditions for an investment supercycle. This is about unlocking investment at a scale we have not seen in generations, so businesses can build, expand, and grow in Canada – creating high-paying careers and building a stronger, more productive and more resilient economy,” said Finance Minister François-Philippe Champagne.
The Canada Investment Summit is hosted by the federal government in partnership with the Canada Pension Plan Investment Board and the Public Sector Pension Investment Board. Over five years, the government’s capital investments and incentives, totalling about $280 billion, are expected to enable more than $1 trillion in total investment from public, private and institutional partners.
