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ARTICLE · 22 SEPTEMBER 2026

Productivity Mega Deduction

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The Government of Canada has proposed a permanent Productivity Mega Deduction that would allow immediate expensing for most depreciable property and Canadian development expenses acquired or incurred on or after September 15, 2026. This significant tax policy change aims to reduce the marginal effective tax rate on business investment from 13% to 6.4%, though certain exclusions and restrictions apply to specific asset categories.

CanadaTax
Jerald M. Wortsman
Jerald M. Wortsman
Steve Marshall
Steve Marshall
Andrew Wong
Andrew Wong
Craig Maurice
Craig Maurice
Julia Zhuo
Julia Zhuo
Hannah Flake
Hannah Flake
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On September 15, the Government of Canada proposed permanent immediate expensing (under its Productivity Mega Deduction) for a broad range of depreciable property acquired on or after September 15, 2026, and for Canadian development expenses incurred on or after September 15, 2026.

What you need to know

  • Most depreciable property acquired on or after September 15, 2026 could qualify for immediate expensing. Exclusions apply, including most buildings, goodwill, licences, franchises, and certain regulated infrastructure assets.
  • Canadian development expenses incurred on or after September 15, 2026 also qualify.
  • Special rules apply to liquefied natural gas (LNG) facilities under the proposals.

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