OTTAWA — The federal government has introduced a new Productivity Mega Deduction aimed at encouraging Canadian businesses to increase investment in equipment, technology and other capital assets.

The proposal would make immediate expensing permanent for a broad range of depreciable property, allowing eligible businesses to deduct the full cost of qualifying investments in the year the assets become available for use. The measure would apply to eligible property acquired on or after September 15, 2026.

The government says the measure could expand the share of business capital investment eligible for immediate expensing to about two-thirds, compared with roughly 15% under the existing Productivity Super-Deduction.

Finance officials estimate the proposal would have an incremental fiscal cost of $36 billion over five years beginning in 2026–27. The government says the measure is intended to lower the cost of investment and strengthen Canada's business tax competitiveness.

The announcement comes as Canadian companies face continued uncertainty around trade, tariffs, productivity and investment. The Bank of Canada has also warned that new U.S. tariffs could weigh on Canadian business investment and hiring.

The proposal puts business investment and productivity at the centre of Ottawa's latest economic agenda.