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ARTICLE · 28 SEPTEMBER 2026

Canada’s Productivity Mega Deduction: A New Opportunity For The Mining Sector

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If enacted, the Productivity Mega Deduction could materially improve the after-tax economics of developing and expanding mines in Canada. By allowing qualifying Canadian development expenses, including certain mine development expenditures, and a broad range of depreciable capital property to be deducted immediately, the proposal could help attract new mining investment and allow companies already operating in Canada to realize earlier tax benefits. The federal government has released draft legislation, but the measures are not yet law.

CanadaEnergy and Natural Resources
John S.M. Turner
John S.M. Turner
Johanna Fipke
Johanna Fipke
Krisztián Tóth
Krisztián Tóth
Andrew J. Gabrielson
Andrew J. Gabrielson
Bradley Freelan
Bradley Freelan
Michael Coburn
Michael Coburn
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If enacted, the Productivity Mega Deduction could materially improve the after-tax economics of developing and expanding mines in Canada. By allowing qualifying Canadian development expenses, including certain mine development expenditures, and a broad range of depreciable capital property to be deducted immediately, the proposal could help attract new mining investment and allow companies already operating in Canada to realize earlier tax benefits. The federal government has released draft legislation, but the measures are not yet law.

What Has Been Proposed

Announced at the Canada Investment Summit in Toronto on September 15, 2026, the Productivity Mega Deduction would substantially expand Canada’s immediate-expensing regime. According to the Department of Finance, approximately two-thirds of investment in capital assets would be eligible for immediate expensing, compared with about 15% under Budget 2025. The Department also estimates that Canada’s marginal effective tax rate on

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