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 unveiled a "productivity mega deduction" to spur business investment during the Canada Investment Summit in Toronto. This expansion of a tax incentive, introduced in the 2025 budget, aims to provide immediate expensing for a broader range of investments. Immediate expensing allows businesses to write off the full cost of an investment in the year it becomes usable.
Ottawa's move will permanently make immediate expensing applicable to a wider array of eligible capital assets, previously limited to about 15% of investments. The government estimates the fiscal cost of this expansion to be $36 billion over five years, starting this year. The initiative is expected to reduce Canada's marginal effective tax rate on new business investment from 13% to 6.4%.
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