The Government of Canada has introduced a new Productivity Mega Deduction to encourage businesses to make new investments in Canada. This measure would allow businesses to immediately deduct the full cost of many qualifying capital investments in the year the asset becomes available for use, rather than claiming the deduction gradually over several years providing a more immediate tax benefit.
The new measure expands the types of investments that may qualify for immediate expensing including certain equipment, computer technology, software, infrastructures and other productivity-enhancing assets. This is intended to make it more attractive for Canadian businesses to invest in new technology, machinery, and other capital assets. The government estimates that approximately two-thirds of capital investment could be eligible, compared with about 15% under the previous rules.
Take a look at these charts from the Department of Finance Canada–
*Notes: METRs are 2026 METRs apart from the Canada Before Budget 2025 METR and the United States Before One Big Beautiful Bill Act (OBBBA) METR
Overall, the main benefit is timing. While the overall tax deduction may generally be similar whether it is claimed immediately or over several years, the timing of the deduction is important. Receiving the tax benefit sooner can allow a business to retain more cash in the current year by supporting day-to-day operations, fund growth, or potentially reinvest those funds back into the economy.
The Productivity Mega Deduction is proposed to apply permanently to most qualifying depreciable property acquired on or after September 15, 2026. Businesses considering major purchases or investments should reach out to us and review the new rules to determine whether their planned expenditures may qualify.