Budget 2026: Investment and expensing
Budget 2026 confirms the Productivity Mega Deduction, announced in September 2026, as a permanent immediate-expensing measure for eligible assets acquired from September 15, 2026, with a limited list of excluded assets. It also proposes to raise the development-expense deduction rate to 100 per cent and to extend the clean electricity and clean technology investment tax credits to property available for use before 2041.
Productivity Mega Deduction
Permanent immediate expensing for about two thirds of capital assets, with limited exclusions, for assets acquired from September 15, 2026.
Sources
Under the Productivity Mega Deduction, eligible investments acquired on or after September 15, 2026, can be deducted right away.
Budget 2026 - Masters of our Destiny · PDF p. 40Full cited page
Under the Productivity Mega Deduction, eligible investments acquired on or after September 15, 2026, can be deducted right away.
About two thirds of capital assets will qualify for immediate expensing, compared with approximately 15% previously.
Budget 2026 - Masters of our Destiny · PDF p. 40Full cited page
About two thirds of capital assets will qualify for immediate expensing, compared with approximately 15% previously.
The measure is permanent.
Budget 2026 - Masters of our Destiny · PDF p. 40Full cited page
The measure is permanent.
With an estimated fiscal cost of $36 billion over five years, beginning in 2026-27,
Budget 2026 - Masters of our Destiny · PDF p. 121Full cited page
With an estimated fiscal cost of $36 billion over five years, beginning in 2026-27,
The limited exclusions from the Productivity Mega Deduction are generally either very long-lived assets, assets that have a significant personal use component, or assets subject to regulated rates.
Budget 2026 - Masters of our Destiny · PDF p. 124Full cited page
The limited exclusions from the Productivity Mega Deduction are generally either very long-lived assets, assets that have a significant personal use component, or assets subject to regulated rates.
The Productivity Mega Deduction excludes a limited range of assets, generally consisting of certain long-lived buildings and intangibles, certain passenger vehicles, regulated natural gas distribution pipelines, and property subject to specialised resource-depletion rules.
Budget 2026 - Masters of our Destiny · PDF p. 125Full cited page
The Productivity Mega Deduction excludes a limited range of assets, generally consisting of certain long-lived buildings and intangibles, certain passenger vehicles, regulated natural gas distribution pipelines, and property subject to specialised resource-depletion rules.
This list of assets is illustrative. Once legislation is tabled, the Canada Revenue Agency will be responsible for determining whether specific assets qualify for the Productivity Mega Deduction based on the facts of each particular case.
Budget 2026 - Masters of our Destiny · PDF p. 124Full cited page
This list of assets is illustrative. Once legislation is tabled, the Canada Revenue Agency will be responsible for determining whether specific assets qualify for the Productivity Mega Deduction based on the facts of each particular case.
CEE is deductible at a 100-per-cent rate, while CDE is deductible at a 30-per-cent rate on a declining-balance basis. The proposed Productivity Mega Deduction would increase the deduction rate for CDE from 30 per cent to 100 per cent.
Budget 2026 - Masters of our Destiny · PDF p. 394Full cited page
CEE is deductible at a 100-per-cent rate, while CDE is deductible at a 30-per-cent rate on a declining-balance basis. The proposed Productivity Mega Deduction would increase the deduction rate for CDE from 30 per cent to 100 per cent.
Legislative and regulatory proposals released on September 15, 2026, to implement the Productivity Mega Deduction.
Budget 2026 - Masters of our Destiny · PDF p. 444Full cited page
Legislative and regulatory proposals released on September 15, 2026, to implement the Productivity Mega Deduction.
Time-limited investment tax credits
Clean electricity and clean technology credits extended to property available for use before 2041.
Sources
Budget 2026 proposes to extend the Clean Electricity and Clean Technology investment tax credits to eligible property that becomes available for use before 2041. The credit rate of the Clean Technology investment tax credit would continue to be reduced to 15 per cent for its last year of availability, which would be for property that becomes available for use in 2040 instead of 2034.
Budget 2026 - Masters of our Destiny · PDF p. 419Full cited page
Budget 2026 proposes to extend the Clean Electricity and Clean Technology investment tax credits to eligible property that becomes available for use before 2041. The credit rate of the Clean Technology investment tax credit would continue to be reduced to 15 per cent for its last year of availability, which would be for property that becomes available for use in 2040 instead of 2034.
Claimants must meet prevailing wage and apprenticeship requirements to obtain the full credit rates.
Budget 2026 - Masters of our Destiny · PDF p. 419Full cited page
Claimants must meet prevailing wage and apprenticeship requirements to obtain the full credit rates.
Analysis of cited budget provisions. Proposals and forecasts are distinguished from implemented measures.
