Canada Unveils Productivity Mega Deduction to Boost Business Investment
Canada's Prime Minister Mark Carney has introduced a new tax incentive called the Productivity Mega Deduction to boost the country's competitiveness in attracting new business investment.
The announcement was made at the first Canada Investment Summit, which is hosted by the federal government and features partnerships with major institutional investors. The summit aims to catalyze $1 trillion of new investment and create more growth, opportunity, and prosperity for Canadians.
The Productivity Mega Deduction will increase the amount of assets covered from 15% to over 65%, including fibre-optic cable, mining property, oil and gas pipelines, software, research and development, computer equipment, aircraft, and vehicles. This move is expected to lower Canada's marginal effective tax rate on new business investment from around 13% to 6.4%, making it the lowest in any major economy.
The government has also made immediate expensing permanent, allowing businesses to recover costs sooner and lowering the after-tax cost of investing. This change is part of a broader effort to reinforce Canada's tax advantage as the most competitive G7 country for new business investment.