Sept. 16, 2026, Canada — Prime Minister Mark Carney has introduced an addition to the Productivity Super-Deduction, introduced in Budget 2025, in the form of the Productivity Mega Deduction. This new tax incentive will increase the amount of assets eligible for immediate 100 per cent cost deduction from roughly 15 per cent of assets 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 and more. In addition, the government is also making immediate expensing permanent so businesses can recover these costs sooner. This will lower the after-tax cost of investing and reportedly reduce Canada’s marginal effective tax rate (METR) on new business investment to 6.4 per cent from 13 per cent, the lowest of any major economy in the world. In comparison, the Department of Finance reports that the OECD average METR excluding Canada is 19 per cent, the G7 excluding Canada sits at 26 per cent and the U.S. at 16.9 per cent. “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,” said François-Philippe Champagne, minister of finance and national revenue, in a press release. “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.” Eligible Property and Expenses A portion of the capital cost of a depreciable property is deductible as capital cost allowance (CCA) each year for income tax purposes, with the CCA rate for each class of property prescribed in the Income Tax Regulations . CCA deduction rates are generally determined based on the class to which the property belongs and calculated on a declining-balance basis. Immediate expensing allows taxpayers to fully deduct the cost of an investment in the year that it becomes available for use. Depreciable property eligible for immediate expensing would include all capital property that is subject to the CCA rules acquired on or after September 15, 2026, except buildings (and additions to buildings) included in CCA classes 1 and 3; property included in CCA classes 14 and 14.1 (e.g., franchises, licenses and goodwill), and class 51 (e.g., regulated natural gas distribution pipelines); certain vehicles in classes 10 and 10.1; and property depreciated under Schedule V and VI of the Income Tax Regulations. Immediate expensing would also be available for Canadian development expenses incurred on or after September 15, 2026. Manufacturing and processing buildings would not be eligible for the Productivity Mega Deduction due to the exclusion of Class 1 buildings, but would continue to be eligible for temporary immediate expensing as announced in Budget 2025. Property that is not eligible for immediate expensing would continue to be eligible for the existing temporary Accelerated Investment Incentive. “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,” Carney said in a media release. “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.”