Productivity Mega Deduction Proposed for Property Acquired On or After September 15

Ottawa has proposed a permanent immediate write-off for most depreciable property that businesses acquire on or after September 15, 2026. Department of Finance Canada calls it the Productivity Mega Deduction and published a backgrounder plus draft legislative proposals on that date. The measure is proposed, not law, and a deduction changes the after-tax cost of an asset without changing how an owner finances it.

Restaurants Canada called it a major win for restaurant investment in a statement the next day, September 16. The association had asked for the same treatment in its own pre-budget submissions.

The test is the acquisition date

The backgrounder's wording is that immediate expensing would be provided "on a permanent basis for most depreciable property that is acquired on or after September 15, 2026." The backgrounder says the government is proposing it. No bill number, no introduction date and no Royal Assent date is published, and no CRA guidance or form exists yet.

Two dates matter and they are not the same one. Eligibility turns on when the property is acquired. The write-off itself lands in the year the property "becomes available for use", which is the backgrounder's own definition of immediate expensing.

The measure was announced the same day at the first Canada Investment Summit, where the release carried no effective date and no legislation status, as our earlier coverage of the summit noted. The backgrounder is where the mechanics live.

What the exclusion list leaves out

Immediate expensing would apply to capital property subject to the capital cost allowance rules, with a carve-out list attached. Buildings and additions to buildings in CCA classes 1 and 3 would be out, as would property in classes 14 and 14.1, which the backgrounder illustrates as "franchises, licenses and goodwill."

Class 51, certain vehicles in classes 10 and 10.1, and property depreciated under Schedule V and VI of the Income Tax Regulations would also be excluded. The government's own example names franchises. How a particular buildout is classed is the owner's accountant's call, and no published source settles it.

The numbers Finance Canada published

The department puts Canada's marginal effective tax rate on new business investment at 6.4 per cent after the measure, cutting it in half. That compares with 16.9 per cent in the United States as of 2026 and an OECD average of 19.0 per cent.

The estimated incremental fiscal cost is $36 billion over five years beginning in 2026-27. Finance Canada also projects average annual economic output of up to around $22 billion over a ten-year horizon, plus long-term employment increases of up to 80,000 jobs annually ten years from now. Those are projections, not measured results.

What the restaurant industry said

Restaurants Canada said it had asked for exactly this. Its pre-budget submissions to Finance Canada and the House of Commons Finance Committee recommended "enhanced accelerated capital cost deductions for investments in equipment, technology and restaurant modernization."

Kelly Higginson, the association's President and CEO, said measures that support success and growth in the industry "ultimately help grow the Canadian economy, produce local jobs and support other industries and hundreds of thousands of related jobs." The association counts restaurants as a $125 billion industry, 4 per cent of Canada's GDP, employing 1.2 million people. Those figures are its own, and they sit beside the margin squeeze its Q2 reporting described.