Carney Unveils Productivity Mega Deduction to Make Canada the G7’s Most Competitive Investment Destination

By: Ebenezer Adugyamfi/ Emmanuel Ayiku for GhanaianNewsCanada

September 15, 2026

Prime Minister Mark Carney has introduced a sweeping new business tax incentive known as the Productivity Mega Deduction, describing it as one of the most significant reforms to Canada’s tax system in decades and a key step toward making the country the most competitive G7 nation for new business investment.

Announced during the Canada Investment Summit in Toronto, the measure is designed to encourage companies to invest more aggressively in machinery, technology, infrastructure, research and other productivity-enhancing assets by allowing businesses to recover investment costs much more quickly.

What is the Productivity Mega Deduction?

The new incentive dramatically expands the range of business assets that qualify for immediate tax deductions.

Under the previous Productivity Super-Deduction introduced in Budget 2025, businesses could immediately deduct the cost of a limited group of eligible investments. The new Mega Deduction increases coverage from about 15% of business assets to more than 65%, making it one of the broadest investment incentives in Canada’s history.

Eligible investments include:

• Fibre-optic cable and broadband infrastructure

• Mining property and critical mineral projects

• Oil and gas pipelines

• Computer equipment and software

• Research and development investments

• Aircraft and commercial vehicles

• Patents and intellectual property

• Rail tracks, bridges and roads

The federal government is also making immediate expensing permanent, allowing businesses to deduct qualifying investments in the year they are made rather than spreading the cost over several years.

Canada’s investment tax rate cut in half

One of the biggest changes is the reduction in Canada’s marginal effective tax rate on new business investment.

The government says the rate will fall from approximately 13% to 6.4%, giving Canada the lowest effective tax rate among major advanced economies and less than half the comparable rate in the United States.

Carney said the reform sends a clear signal to global investors that Canada intends to become the world’s best place to build major projects and grow innovative businesses.

Part of a C$1 trillion investment strategy

The Productivity Mega Deduction forms part of Carney’s broader ambition to attract and catalyze C$1 trillion in new investment over the next five years.

The strategy targets sectors including energy, artificial intelligence, transportation, defence, aerospace, advanced manufacturing and critical minerals, with more than 160 investment-ready projects being showcased to international investors at the Toronto summit.

The government believes increasing private investment will strengthen productivity, create high-paying jobs and reduce Canada’s economic dependence on the United States by expanding trade and investment partnerships around the world.

Business groups welcome the move

Finance Minister François-Philippe Champagne described the deduction as a “game changer” for Canadian investment, saying it reinforces Canada’s position as the strongest G7 destination for businesses looking to expand.

Economists say allowing companies to write off investments immediately lowers the after-tax cost of purchasing equipment, constructing infrastructure and investing in new technologies, making large projects more financially attractive.

Why it matters

Canada has faced years of criticism over weak productivity growth and lower business investment compared with other advanced economies. The federal government hopes the new deduction will encourage companies to modernize factories, expand digital infrastructure, invest in clean and conventional energy, and accelerate innovation across the economy.

If approved by Parliament, the Productivity Mega Deduction would become one of the cornerstone policies of Carney’s economic agenda, positioning Canada to compete more aggressively for global investment at a time when countries are racing to attract capital in AI, manufacturing and critical infrastructure.