Canada: Introduction of new productivity mega deduction
The proposed measure would allow Canadian businesses to immediately write off the cost of many capital investments when they become available for use.
The Department of Finance on September 15, 2026, announced the introduction of the productivity mega deduction, which would significantly expand the productivity super-deduction announced in the 2025 federal budget and supersede many of the previous capital cost allowance (CCA) measures.
Under the proposed measure:
- Canadian businesses would generally be able to expense the full cost of most depreciable property acquired on or after September 15, 2026.
- Taxpayers would generally be allowed to write off the cost of many additional capital investments in the year when they become available for use.
- Special rules would apply for liquefied natural gas (LNG) facilities and Canadian development expenses (CDE).
While the proposed deduction would broaden access to immediate expensing and accelerate tax deductions for businesses making substantial capital investments, certain types of property would remain ineligible. Specifically, buildings and certain vehicles would not qualify. Businesses considering major acquisitions in equipment, technology, infrastructure, or the resource sector should determine whether their planned investments would qualify for immediate expensing.
Read a September 2026 report prepared by the KPMG member firm in Canada