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ARTICLE · 22 SEPTEMBER 2026

Canada Announces Productivity Mega Deduction

Blake, Cassels & Graydon LLP
Blake, Cassels & Graydon LLP
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Blake, Cassels & Graydon LLP

Blake, Cassels & Graydon LLP

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Canada's federal government has introduced the Productivity Mega Deduction, a groundbreaking tax measure offering immediate expensing for approximately two-thirds of capital asset investments. This initiative aims to reduce Canada's marginal effective tax rate on new business investments to 6.4%, positioning it as the most competitive among G7 nations. The measure extends to Canadian Development Expenses in the energy and mining sectors, potentially transforming the economics of major capital-intensive proj

CanadaTax
Daniel Jankovic
Daniel Jankovic
Monica Cheng
Monica Cheng
Ahmed Elsaghir
Ahmed Elsaghir
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On September 15, 2026, as part of the inaugural Canada Investment Summit, the federal government introduced the Productivity Mega Deduction, a new measure designed to encourage business investments, enhance Canada’s competitiveness and improve the productivity rate. The measure is part of a broader package of initiatives intended to support investments in major projects across the country.

If implemented as proposed, the Productivity Mega Deduction would provide permanent, immediate expensing for a broad range of depreciable property, with approximately two-thirds of investment in capital assets expected to qualify.

Conditions

To qualify for immediate expensing under the Productivity Mega Deduction, the draft legislation provides that the following conditions must be satisfied:

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