An analysis from Borden Ladner Gervais, Taxand Canada
Canada’s federal government has proposed a new Productivity Mega Deduction, which would allow businesses to immediately deduct the full cost of eligible capital investments rather than claiming tax relief gradually over several years. The measure is designed to encourage investment, improve productivity and strengthen Canada’s competitiveness as a location for new business projects.
If introduced as planned, the Productivity Mega Deduction would apply to eligible assets acquired on or after 15 September 2026. A wide range of depreciable business assets would qualify, although certain buildings, intangible assets, natural gas infrastructure and some vehicles would be excluded. Special rules would also apply to used assets and related-party transactions to ensure the incentive supports new investment.
The proposals are expected to be particularly relevant for capital-intensive sectors such as manufacturing, technology, energy, and infrastructure. Businesses planning significant investments may wish to review upcoming capital expenditure programmes to determine whether projects could benefit from the accelerated tax relief and assess any restrictions that may apply.
Siwei Chen, Kevin Bianchini, Steve Suarez, Danielle Lewchuk, Joelle Kabouchi, Jamin Chen, Ryma Nasrallah and Alessandro Cotugno from our Canadian member firm, Borden Ladner Gervais, provide a comprehensive analysis on the Productivity Mega Deduction, including considerations for businesses, which you can read here.