Prime Minister Mark Carney’s government has introduced a major new tax measure designed to encourage business investment across Canada, expanding the number of assets eligible for immediate tax deductions.

Announced at the Canada Investment Summit in Toronto, the Productivity Mega Deduction expands immediate expensing from roughly 15% of business assets to more than 65%, according to the federal government. Eligible investments include fibre-optic cable, mining property, oil and gas pipelines, software, research and development, computer equipment, aircraft, vehicles and infrastructure.

The government says the measure will also make immediate expensing permanent. It estimates that Canada's marginal effective tax rate on new business investment will fall from approximately 13% to 6.4% under the changes.

Carney's government has presented the policy as part of its broader effort to increase productivity, attract capital and expand investment in Canadian industries.

The announcement comes as Ottawa seeks to strengthen Canada's economy amid continuing trade tensions with the United States. Reuters reported that the government is targeting substantially higher investment while pursuing changes to Canada's business and regulatory environment.

The policy has also prompted differing reactions. Supporters cited by Reuters have highlighted the potential effect on investment competitiveness, while critics have questioned whether tax incentives will translate into increased business investment.

The Productivity Mega Deduction is now one of the Carney government's most significant new business-tax measures, putting investment and productivity at the centre of its economic agenda.