Prime Minister Carney Introduces New Productivity Mega Deduction to Boost Canada’s Advantage as the Most Competitive G7 Country for New Business Investment

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Canada has what the world wants. We are a superpower in both clean and conventional energy, with vast deposits of critical minerals. We are the best-connected economy in the world with free trade deals with countries covering 1.5 billion consumers, and we are by far the most competitive country in the G7 for new business investment. We have one of the world’s most educated workforces, the lowest net debt-to-GDP ratio in the G7, and the fiscal capacity to act decisively. Canada is leveraging these strengths to catalyse $1 trillion of new investment and create more growth, opportunity, and prosperity for Canadians.

To that end, the Prime Minister, Mark Carney, has introduced a series of changes to make Canada a more competitive environment for businesses. The government has cut taxes on incomes, capital gains, and new business investment. In Budget 2025, the federal government introduced a Productivity Super-Deduction so that businesses can immediately deduct 100% of the cost of eligible new investments – machinery, equipment, and technology.

Today, at the first Canada Investment Summit, Prime Minister Carney announced that the federal government is building on that success with the new Productivity Mega Deduction. This game-changing new tax incentive will increase the amount of assets covered from roughly 15% of assets to more than 65%, including fibre-optic cable, mining property, oil and gas pipelines, software, research and development, computer equipment, aircraft and vehicles, patents, rail track, bridges, and roads.

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To reinforce Canada’s tax advantage, the federal government is also making immediate expensing permanent so businesses can recover these costs sooner. This will lower the after-tax cost of investing and boost capital investment across Canada. As a result, Canada’s marginal effective tax rate on new business investment will fall from roughly 13% to 6.4% – the lowest of any major economy in the world and less than half the rate in the United States.

In an increasingly uncertain world, a confident Canada is choosing to build – and becoming the best place in the world to build. We are leveraging our strengths, scaling our ambition, and moving with speed to unleash our full potential. We are catalysing unprecedented levels of new investment to build a stronger, more independent, more resilient Canadian economy.

Quotes

“Canada has what the world wants. We’re an energy superpower with the most educated workforce in the world and rock-solid fiscal strength. We are capitalising on these strengths and making Canada the best place in the world to invest. With the lowest marginal effective tax rate in the G7 by an order of magnitude, we are sending a clear message to the world: Canada is building big. Build with us.”
The Rt. Hon. Mark Carney, Prime Minister of Canada

“This is one of the most significant changes to Canada’s business tax system in half a century, and a game changer for investment in this country. With the Productivity Mega Deduction, we are reinforcing Canada’s position as the most competitive country in the G7 for new business investment and setting the conditions for an investment supercycle. This is about unlocking investment at a scale we have not seen in generations, so businesses can build, expand, and grow in Canada – creating high-paying careers and building a stronger, more productive and more resilient economy.”
The Hon. François-Philippe Champagne, Minister of Finance and National Revenue

Quick facts

The Canada Investment Summit is hosted by the federal government in partnership with the Canada Pension Plan Investment Board (CPP Investments) and the Public Sector Pension Investment Board (PSP Investments), two of Canada’s largest and most sophisticated institutional investors.
Over five years, the government’s capital investments and incentives in support of third parties, totalling about $280 billion, are expected to enable more than $1 trillion in total investment from public, private, and institutional partners.
Canada consistently ranks among the top destinations for foreign direct investment confidence, with a AAA credit rating, the lowest net debt-to-GDP ratio in the G7, and the number one ranking among G7 countries for banking stability.
Canada has the best tax treatment for new business in the G7.
Under Canada’s capital cost allowance system, taxpayers deduct the cost of depreciable assets such as machinery and equipment over time. Immediate expensing would allow them to deduct the full cost of an eligible investment in the first year the asset becomes available for use.