Finance Canada Says More Than 65% of Assets Would Qualify for the Productivity Mega Deduction

The Productivity Mega Deduction is still a proposal. On October 1 in Saint John, Department of Finance Canada said the share of business assets you could write off in the first year would jump "from roughly 15% of assets to more than 65%." If you are buying equipment this fall, note the word proposal. There is no bill.

The measure was first announced September 15 at the first Canada Investment Summit, with the start date and the exclusions published the same day. PFG's earlier coverage set out both. The October 1 release repeats neither.

What October 1 adds

The new number is the 65%, the backgrounder's two-thirds as a percentage. The release also names property it says would qualify, from "fibre-optic cable, greenhouses, mining property, oil and gas pipelines, software, research and development, computer equipment" to aircraft, vehicles, patents, rail track, bridges and roads. It lists no exclusions. It says the tax rate on new business investment would fall "from roughly 13% to 6.4%."

The timing holds: the full cost would be deducted "in the first year the asset becomes available for use." Wayne Long, Secretary of State for the Canada Revenue Agency and Financial Institutions, was at the Saint John event. Finance Minister Fran�ois-Philippe Champagne called it "one of the most significant changes to Canada's business tax system in half a century."

The September backgrounder still sets the limits

The September 15 backgrounder has the mechanics, under the capital cost allowance rules. The government "proposes to implement the Productivity Mega Deduction" for most depreciable property "acquired on or after September 15, 2026." Out: "buildings (and additions to buildings) included in CCA classes 1 and 3" and "certain vehicles in classes 10 and 10.1."

Classes 14 and 14.1 are out too, and the backgrounder's own example is "franchises, licenses and goodwill." There is one wrinkle between the two documents: October 1 lists vehicles as eligible, September 15 excludes certain vehicles. The draft legislation from September 15 defines an "excluded vehicle."

No bill on the record

None of the three Finance Canada pages names a bill or a date for one. The draft legislation page shows no deadline for comments.

On October 6, no House government bill on LEGISinfo named the measure in its title. Bill C-39, the Building Canada Strong Act, covers project reviews, supply chains and the workforce.