Carney introduces 100% tax write-offs for business investments

Key Takeaways:

• Prime Minister Mark Carney introduced the permanent Productivity Mega Deduction, allowing businesses to immediately write off 100% of new capital asset costs in year one.
• The policy expands immediate tax expensing from 15% to over 65% of corporate capital assets, covering tech, infrastructure, mining, transit, and pipelines.
• The deduction slashes Canada’s marginal effective tax rate on new investment to 6.4%—the lowest in the G7—as part of a broader push to catalyze $1 trillion in capital.

The Whole Story:

Prime Minister Mark Carney has introduced the Productivity Mega Deduction, a permanent tax policy allowing businesses operating in Canada to immediately write off 100% of the cost of new capital investments in their first year. Announced at the inaugural Canada Investment Summit in Toronto, the measure establishes permanent immediate expensing to dramatically lower capital costs and accelerate national productivity growth.

The policy builds upon Budget 2025’s initial tax incentives by expanding eligible asset coverage from 15 percent to more than 65 percent of all business capital spending. Qualifying properties include fiber-optic networks, mining developments, pipelines, software, research equipment, aircraft, commercial vehicles, patents, rail infrastructure, bridges, and municipal roads. Federal calculations project the write-offs will cut Canada’s marginal effective tax rate on new business investment in half—from 13 percent down to 6.4 percent—creating the lowest tax burden for new investment among G7 nations and less than half the United States rate.

The tax measure is part of a broader federal push to catalyze $1 trillion in total public, private, and institutional capital deployment over the next five years. Co-hosted alongside institutional investment giants CPP Investments and PSP Investments, the summit brought together global business leaders to showcase Canada’s resource, tech, and major infrastructure pipeline.

“Canada has what the world wants. We’re an energy superpower with the most educated workforce in the world and rock-solid fiscal strength,” said Prime Minister Mark Carney. “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.”

Finance Minister François-Philippe Champagne called the tax reform one of the most significant changes to Canada’s business tax framework in 50 years, noting that permanent immediate expensing gives firms the long-term certainty required to commit to generational projects.