The federal government has introduced a major new tax incentive aimed at encouraging businesses to invest more in Canada, as Prime Minister Mark Carney announced the measure at the 2026 Canada Investment Summit in Toronto.
Dubbed the “productivity mega deduction,” the new tax incentive will significantly expand the share of business assets eligible for accelerated tax treatment, raising the coverage from roughly 15 per cent to more than 65 per cent of qualifying assets. Categories affected include fibre-optic cable, mining property, oil and gas pipelines, software, rail track and bridges, among other infrastructure and equipment.
Cost and Fiscal Scope
The federal government estimates the new deduction will cost $36 billion over five years, with the program beginning this year. The announcement comes as Ottawa looks to make Canada a more attractive destination for business investment through changes to the tax system.
In addition to the mega deduction, the government is making immediate expensing permanent, a change that will allow businesses to recover the costs of investments more quickly. According to the announcement, this shift will lower Canada’s marginal effective tax rate on new business investment to 6.4 per cent, down from 13 per cent.
Broader Investment Push
The measures were unveiled during the Canada Investment Summit, a gathering focused on business investment in Canada. The combination of the expanded deduction and permanent immediate expensing represents a broad shift in how the federal government treats capital investment for tax purposes, covering a wide range of industries from telecommunications to transportation infrastructure.
This article is for informational purposes only and does not constitute financial, investment, or legal advice. Consult a licensed financial advisor before making investment decisions.
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