By: Ebenezer Adugyamfi & Emmanuel Ayiku for GhanaianNewsCanada
28 OCTOBER 2026
TORONTO, Ontario — The Ontario government has announced an $8-billion business tax-relief initiative designed to complement the federal government’s Productivity Mega Deduction, in a move aimed at encouraging investment, expanding businesses and creating jobs across the province.
The initiative, called the Ontario Competitiveness Tax Cut, was announced on October 28 as part of the provincial government’s broader Tax Action Plan. It would allow eligible businesses to immediately write off the full cost of a wider range of capital investments, reducing the time businesses must wait to claim tax deductions on qualifying assets.
The Progressive Conservative government, led by Premier Doug Ford, says the measure could attract at least $11 billion in additional capital investment, support the creation of 30,000 jobs and contribute approximately $6 billion to Ontario’s gross domestic product.
The proposed tax relief is intended to help Ontario businesses respond to economic uncertainty, including trade tensions and tariffs, while making the province a more attractive destination for domestic and international investors.
How the Ontario tax cut would work
Under the existing tax system, businesses generally deduct the cost of equipment, machinery and other depreciable assets over several years through capital cost allowance rules.
The proposed measure would allow eligible businesses to deduct 100 per cent of the cost of qualifying assets in the year those assets become available for use.
For example, if a qualifying business purchases eligible equipment worth $1 million, it could potentially deduct the entire $1 million from its taxable income in the relevant year instead of spreading the deduction over several years.
This does not mean the government would hand the business $1 million in cash. Rather, the business could reduce the amount of income on which it pays tax, subject to the applicable eligibility requirements and tax rules.
The timing of the deduction can improve cash flow by allowing businesses to recover the tax value of their investments sooner. That could help companies purchase new equipment, modernise operations, adopt technology and expand production.
The measure would operate alongside Ottawa’s Productivity Mega Deduction, which Prime Minister Mark Carney announced in September.
Government projects 30,000 new jobs
According to the Ontario government, the provincial tax initiative is expected to provide more than $8 billion in additional provincial tax relief over five years.
The government estimates that the measure could attract at least $11 billion in additional capital investment and support 30,000 jobs.
It also projects that the initiative could contribute $6 billion to Ontario’s GDP, as businesses invest in new assets and increase their productive capacity.
The government argues that reducing the tax cost of investment would make it easier for companies to expand in Ontario rather than direct new projects and capital elsewhere.
However, the projected economic benefits have not yet been realised. The eventual impact will depend on factors such as business demand, the number of companies that qualify, the investments they make and broader economic conditions.
A wider effort to strengthen Ontario’s economy
The announcement forms part of Ontario’s effort to improve its competitiveness amid uncertainty over international trade and the cost of doing business.
The province has faced pressure from tariffs and other trade-related challenges, particularly given the importance of the United States to Ontario’s manufacturing and export industries.
The Ford government says lowering the cost of business investment will help companies become more resilient, improve productivity and protect employment.
Ontario also says the new initiative builds on earlier tax measures, including a small-business tax cut announced in the 2026 provincial budget.
When combined with accelerated write-off measures already included in the province’s 2026 budget, the Ontario Competitiveness Tax Cut would bring the government’s total tax relief supporting business investment to more than $12 billion over five years.
The government estimates that Ontario’s marginal effective tax rate on new business investment would fall to 3.6 per cent under the proposed changes, below the comparable averages for the United States, the G7 and the Organisation for Economic Co-operation and Development.
That rate measures the effective tax burden on an additional investment, taking account of corporate taxes and other rules affecting the cost of capital.
How it connects to Ottawa’s Productivity Mega Deduction
The federal government introduced the Productivity Mega Deduction on September 15, 2026, as part of Prime Minister Mark Carney’s effort to stimulate investment and improve Canada’s economic productivity.
Ottawa says its proposal would expand immediate expensing from roughly 15 per cent of capital assets to more than 65 per cent.
The eligible assets would cover a broad range of investments, including computer equipment, software, research and development, mining property, oil and gas pipelines, fibre-optic infrastructure, aircraft, vehicles, rail tracks, bridges and roads, subject to specific exclusions.
The federal government has estimated that its measure would cost approximately $36 billion over five years.
Ontario’s announcement is intended to provide a corresponding provincial tax incentive, allowing qualifying businesses to benefit from faster deductions under the provincial system as well.
Together, the federal and provincial measures are designed to lower the overall tax cost of investing in eligible assets in Ontario.
The federal government has said the Productivity Mega Deduction could help lower Canada’s marginal effective tax rate on new business investment from approximately 13 per cent to 6.4 per cent.
Questions about who benefits
Although the government expects the measure to encourage investment and job creation, its direct benefits will depend on the type of business and the assets it purchases.
Companies planning major investments in eligible machinery, technology, infrastructure or other qualifying assets may be better positioned to benefit than businesses with limited capital spending.
The measure is also not equivalent to a general cash payment to every business. A company must meet the relevant requirements and have eligible expenditures to claim the deductions.
The projected job and investment figures will therefore need to be assessed against the actual take-up of the programme and subsequent economic results.
The initiative also comes with a fiscal cost: allowing businesses to deduct eligible expenses earlier reduces tax revenue in the near term, although the government expects the policy to encourage additional economic activity over time.
What happens next?
The Ontario government says further details on its economic and fiscal plans will be included in its 2026 Fall Economic Statement, scheduled for October 29.
The proposed provincial tax changes will need to proceed through the relevant legislative and implementation processes before businesses can rely on the final rules.
For companies considering new investments, the eligibility conditions and timing of purchases will be important in determining whether the measure applies.
The announcement signals Ontario’s intention to use tax policy to attract investment and strengthen its position as a destination for business expansion. Whether the programme ultimately delivers the projected jobs and economic growth will become clearer as the policy is implemented and companies make investment decisions.
