Mark Carney stood before a room of global executives at Toronto’s Four Seasons Hotel on Tuesday and did something Canadian prime ministers rarely do: he promised to make Canada a cheaper place to invest than the United States. The vehicle is a permanent tax change so significant that one economist called it possibly the largest one-time federal tax shift in decades — and it comes with a price tag Ottawa itself pegs at $36-billion over five years.
The announcement, made at the first-ever Canada Investment Summit, is not a modest tweak. It is a structural rewrite of how Canada treats capital spending, arriving at a moment when the government is simultaneously trying to fast-track major projects, recruit foreign pension money, and reassure a country anxious about its economic relationship with Washington.
What Ottawa Actually Changed
Under the old system, companies that bought new equipment, built new infrastructure or invested in software could only deduct those costs from taxable income gradually, spread out over years. The new measure — officially the “productivity mega deduction” — lets businesses write off the full cost of eligible new assets immediately, in the year they become usable, according to reporting from The Globe and Mail.
This is a considerably bigger swing than Carney’s own “productivity super deduction” from Budget 2025, which the Globe notes only covered narrow categories of investment and was time-limited. The new version is permanent, and Ottawa says it will apply retroactively to Sept. 15, the day of the announcement.
The scope expansion is the headline number: government estimates cited by the Globe show that roughly 65 per cent of new capital investment — everything from fibre-optic cable and software to research and development, roads and bridges — will now qualify for full, immediate expensing, up from just 15 per cent today. BetaKit’s coverage of the announcement confirms the same figures, describing the jump from 15 to 65 per cent as the core mechanical change.
The government says the combined effect will cut Canada’s marginal effective tax rate on new business investment to 6.4 per cent from 13 per cent — a rate it describes as less than half that of the United States. “Put it simply, the incentive for companies to invest in Canada is twice as high as it is in the United States,” Carney told the summit, according to the Globe’s account.
Who Stands to Gain
The list of winners assembled at the summit was not subtle. Lisa Baiton, chief executive of the Canadian Association of Petroleum Producers, called the deduction — paired with recent amendments to the Impact Assessment Act — a “major step forward” for oil and gas. Manitoba Premier Wab Kinew said the change would be significant for his province’s pitch to expand the Port of Churchill. Annette Mosman, CEO of Dutch pension giant APG, told reporters the tax changes were concrete proof of Carney’s pledge to make Canada “cheaper, faster, better” to invest in, adding: “I think that does move the needle… we’re looking for investable assets, and then at that level you have to compete with assets of other countries.”
Business lobbies got what they’d been asking for. The Business Council of Canada, the Canadian Chamber of Commerce, and the Toronto Region Board of Trade each told the Globe they had separately pushed for a similar incentive. CPA Canada, representing the country’s accountants, welcomed the move as an important step — but added a caveat that matters: Canada still needs broader tax reform to fix its deeper productivity and competitiveness problems.
Trevor Tombe, an economics professor at the University of Calgary, offered the most pointed technical read. “It’s really big,” he said, calling it “perhaps the largest one-time tax change federally in decades.” What makes it significant, in his view, isn’t just the size but the permanence — temporary measures, he noted, tend to only pull forward investments that were already close to ready, whereas a permanent deduction makes longer-horizon, multi-year projects more attractive too.
But Tombe also flagged the limits of Ottawa’s ambition. He noted the government could have gone further and covered the full 100 per cent of business investment rather than two-thirds of it. And the benefits aren’t evenly spread: his review of the government’s own figures found wholesale and retail trade would see the smallest reduction in effective tax rates, largely because the measure broadly excludes buildings — which make up a disproportionate share of new investment costs in those sectors. In other words, a warehouse retailer building new stores gets far less relief than a manufacturer buying new machinery or a tech firm investing in software.
The Price Tag and the Fiscal Trade-Off
The $36-billion, five-year cost estimate drew immediate scrutiny. Alexandre Laurin, vice-president and director of research at the C.D. Howe Institute, told the Globe that figure implies the deduction will shave roughly 7.5 per cent off annual federal corporate tax revenue on average — a number he called significant. But he cautioned the real fiscal impact is more nuanced than the headline figure suggests: the deduction effectively moves the cost of writeoffs forward in time rather than eliminating it outright. Companies get a large deduction in the first year of an investment, but lose the smaller, staggered deductions they would otherwise have claimed in subsequent years — meaning the true multi-decade cost to government revenue is not simply $36-billion and done.
That framing matters for how Ottawa’s critics and defenders will argue about this policy in the years ahead: is it a genuine giveaway, or mostly a timing shift that eventually washes out? The sources don’t resolve that debate, but they make clear it’s the central fiscal question hanging over the mega deduction.
Part of a Bigger, Riskier Bet
The deduction did not arrive in isolation. It was one plank of a broader push unveiled at the summit, alongside the new Build Canada Strong Act — which Carney described with the line “one project, one review, one year” — and a directive for the Canada Revenue Agency to prioritize advance tax rulings for investments over $1-billion. Carney’s stated goal, according to Globe reporting on remarks at the summit’s close, is to mobilize $1-trillion in new investment over five years, and organizers said the two-day event alone produced close to $500-billion in new commitments. Separately, CPP Investments and Brookfield have already moved to launch a $50-billion fund aimed at major Canadian projects, a sign that domestic institutional capital is lining up alongside the tax changes.
The political theatre around the summit underscored how much is riding on this. Former prime minister Stephen Harper, appearing at Carney’s invitation to close out the event, praised the government’s course-correction on energy development and said Canada had “no choice” but to reduce reliance on the United States, warning there “will be significant costs to this effort.” Former Liberal PM Jean Chrétien was also present. But the framing was not universally welcomed: NDP Leader Avi Lewis argued the government was undermining, not building, national unity, saying in a statement, “You don’t save Canada by selling it off piece by piece,” and pointing specifically to concerns about airports moving out of public hands.
Our Take
What Ottawa has done here is a genuine bet, not a symbolic gesture — the numbers involved, from the 15-to-65 per cent jump in eligible investment to the collapse in the marginal effective tax rate, are large enough that Trevor Tombe’s “largest one-time tax change in decades” framing looks justified rather than hyperbolic. In our view, the more interesting question isn’t whether businesses will take the deduction — of course they will — but which businesses, and where. The exclusion of buildings means retailers and wholesalers, sectors that touch ordinary consumers most directly through jobs and store investment, get comparatively little, while capital-intensive players in oil and gas, ports, pipelines and tech infrastructure get the most obvious lift. That’s consistent with the government’s stated goal of nation-building megaprojects, but it does mean the deduction is not a broad-based productivity fix so much as a targeted lever for the kinds of assets Ottawa has decided matter most right now.
The fiscal debate flagged by Alexandre Laurin also deserves more attention than a $36-billion headline number can give it. If this is mostly a timing shift — pulling deductions forward rather than creating them from nothing — then the political fight over whether this is a “cost” to government or a wash over time is likely to resurface every budget cycle, especially if growth doesn’t materialize as promised. CPA Canada’s caveat that Canada still needs broader tax reform beyond this one measure suggests even sympathetic voices see this as necessary but not sufficient.
Finally, we think the political framing matters as much as the economics. Pairing the tax change with Stephen Harper’s appearance, talk of energy superpower status, and explicit references to reducing U.S. reliance signals this is as much about signalling sovereignty and unity — amid live Alberta separatist pressure — as it is about spreadsheets. Whether foreign pension funds like APG and domestic vehicles like the new CPP-Brookfield fund actually convert those summit commitments into shovels in the ground over the next five years will be the real test of whether the mega deduction was a turning point or simply an expensive down payment on a promise.
This is a Commentary piece: analysis and editorial perspective from Canadian Business News, clearly distinguished above from the reported facts it’s based on. It is not financial, investment, or legal advice.
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