Overview
- Prime Minister Mark Carney formally announced the policy at the Canada Investment Summit in Toronto, expanding a 2025 budget measure into the new “productivity mega deduction.”
- The government says the measure now covers more than 65 percent of capital investments, up from roughly 15 percent under last year’s plan.
- Under immediate expensing, firms can fully write off the cost of an asset in the year it becomes available for use, which the government says cuts the marginal effective tax rate on new investment to 6.4 percent from 13 percent.
- Ottawa estimates the permanent expansion will cost about $36 billion over five years, a fiscal trade-off likely to draw scrutiny from opposition parties and federal watchdogs.
- The change is intended to signal a pro-investment stance to domestic and international firms and could speed business buying of machinery and equipment, while analysts will watch how the upfront revenue loss affects future budget choices.