Tax changes aim to stimulate business investment
The federal government’s new Productivity Mega Deduction will cut the tax rate on new business investment in Canada from 13 per cent to 6.4 per cent, a move the government says will encourage businesses to invest, expand and create jobs.
Markham-Thornhill MP Tim Hodgson said the measure is one of the most significant changes to Canada’s business tax system in half a century.
“The idea is simple: when businesses invest in Canada, we want to help them grow faster, create more jobs, raise wages, expand their operations, and compete successfully in a changing global economy,” Hodgson said.
Under the previous tax system, businesses generally had to claim the cost of major investments — such as machinery, new technology, factory upgrades and equipment — gradually over several years.
“By allowing businesses to write off major investments right away, we’re making it easier for them to reinvest in their operations, hire workers, increase wages, expand production, and take on new opportunities, so we can build the strongest economy in the G7 and make all Canadians more prosperous and secure,” said Hodgson.
The government says the measure will make Canada the most tax-competitive country in the G7 for new business investment, lowering the effective tax rate on new investment to 6.4 per cent — less than half the U.S. rate and far below the OECD and G7 averages.
The measure is also permanent, which the government says will provide businesses and investors with greater certainty when making long-term investment decisions.
“Businesses and investors are looking for certainty, and this measure sends a clear signal that Canada is the best place in the G7 to invest, build, and create jobs over the long term,” said Hodgson.
He said the policy is part of a broader effort to attract investment to Canada.
“In an increasingly uncertain world, Canada is choosing to build. By cutting taxes on new investment and moving with speed and ambition, we are setting the conditions for a Canadian investment supercycle that will drive growth, productivity, and prosperity for generations,” Hodgson said.
He also pointed to the federal government’s recent Investment Summit, where Canada promoted its skilled workforce, energy and critical mineral resources, political stability and trade access to 1.5 billion consumers.
“Canada is open for business,” Hodgson said, adding that foreign direct investment reached nearly $97 billion in 2025, the highest annual level since 2007. He also said Canada secured nearly $500 billion in investment commitments during the summit.
For businesses in Markham and across Canada, the government says the goal is straightforward: make it easier and more attractive to invest, grow and create jobs.
Photo: “When businesses invest in Canada, we want to help them grow faster, create more jobs, raise wages, expand their operations, and compete successfully in a changing global economy,” said MP Tim Hodgson.