Carney Broadens Tax Break for New Investments Including Pipelines, Mining

Prime Minister Mark Carney has announced an expanded tax incentive allowing businesses to immediately deduct 100 percent of the cost of a broader range of eligible new investments, including pipelines, mining property, and infrastructure.

Carney announced the “Productivity Mega Deduction” on day two of the Canada Investment Summit in Toronto on Sept. 15. The measure expands the existing Productivity Super-Deduction, increasing the share of assets eligible for immediate expensing to more than 65 percent from roughly 15 percent.

The prime minister said the expanded deduction will cover a broader range of assets, including fibre-optic cable, mining property, oil and gas pipelines, software, research and development, computer equipment, aircraft and vehicles, patents, rail track, bridges and roads.

The change is expected to reduce Canada’s marginal effective tax rate on new business investment from roughly 13 percent to 6.4 percent.

Ottawa estimates the fiscal cost of the measure at $36 billion over five years, beginning this year.

Immediate expensing allows businesses to claim the full deduction for an eligible investment in the year the asset becomes available for use, rather than deducting the cost over a longer period.

The prime minister said the policy will cover more than four times the capital assets previously eligible for immediate expensing. He described the measure as making Canada “by far the most tax-competitive advanced economy for new investment.”

Carney also said the change will give Canada the lowest marginal effective tax rate in the G7, at roughly one-third of the average rate in the Organization for Economic Co-operation and Development (OECD) and one-quarter of the G7 average.

Carney later told reporters businesses would still pay taxes on the investments but would receive the deductions sooner. He said the measure would give businesses greater flexibility and choice, and cited evidence that immediate expensing can encourage investment over time.

He said the measures are intended to support job creation and strengthen Canada’s economic resilience and independence.

University of Calgary economics professor Trevor Tombe said the new scheme cuts the effective tax on new investment in half.

“It might be the biggest one-time tax change (in terms of the [marginal effective tax rates] effect) in many many years,” Tombe said on X.

The Canadian Press contributed to this report.