Carney says investment tax incentive expansion is a “mega deduction”
The federal government is expanding a tax incentive aimed at boosting new business investment.
Prime Minister Mark Carney announced an expanded tax incentive aimed at encouraging new business investment, dubbing it the "productivity mega deduction." This initiative, unveiled during the Canada Investment Summit in Toronto, is an expansion of a measure introduced in the 2025 budget. Ottawa plans to make immediate expensing permanent for a broader range of investments, which is forecasted to carry a fiscal cost of $36 billion over the next five years, beginning this year.
Immediate expensing allows businesses to fully deduct the cost of an investment in the year it becomes operational. The expanded deduction will now apply to over 65% of investments, up from 15% in the previous budget. The government asserts that this move will reduce Canada's marginal effective tax rate on new business investment from 13% to 6.4%.
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