Business groups in Canada are welcoming the federal government’s introduction of the Productivity Mega Deduction described by the government as a game-changing initiative to boost business investment, enhance certainty and simplicity for businesses, and strengthen Canada’s tax competitiveness.
Restaurants Canada said it welcomes the Productivity Mega Deduction announced by Prime Minister Carney. This is an important measure that will have a significant impact on the restaurant sector’s ability to invest in productivity and growth and directly addresses one of our key recommendations to the federal government.
Restaurants Canada said it has consistently called on the federal government to make it easier for restaurants to invest in their businesses.
“In our pre-budget submissions to Finance Canada and the House of Commons Finance Committee, we specifically recommended enhanced accelerated capital cost deductions for investments in equipment, technology and restaurant modernization,” said Kelly Higginson, President and CEO, Restaurants Canada.
“This proposed measure will allow businesses to immediately deduct the full cost of most qualifying capital investments in the year they become available for use, making it easier for restaurants to invest in expansion, equipment, technology and modernization.
“With the rising cost of doing business and ongoing economic uncertainty, many restaurants have had to put equipment and building investment plans on hold. That constrains productivity and growth within restaurants and reduces investment in the Canadian businesses that supply them with equipment, technology, construction and other services.”
The national organization said restaurants are a $125 billion industry representing 4% of Canada’s GDP. They employ 1.2 million people, contribute $26 billion in taxes and purchase $43 billion in food and beverage products, most of which come from local suppliers.
“Measures that support success and growth in our industry ultimately help grow the Canadian economy, produce local jobs and support other industries and hundreds of thousands of related jobs. We look forward to working with the federal government on this measure and others that can unlock the full economic potential of the restaurant sector,” added Higginson.
To boost business investment, enhance certainty and simplicity for businesses, and strengthen Canada’s tax competitiveness, the Government of Canada announced that it proposes to implement the Productivity Mega Deduction, which will provide immediate expensing for a broad-based range of depreciable property on a permanent basis. Immediate expensing allows taxpayers to fully write off the cost of an investment in the year that it becomes available for use. This powerful investment incentive will create the conditions for an extended period of higher investment—a Canadian investment supercycle.
“This measure builds on the Productivity Super-Deduction announced in Budget 2025, which provides immediate expensing to about 15 per cent of investment in capital assets, including machinery, equipment, and buildings used for manufacturing and processing, clean energy generation and energy conservation equipment, zero-emission vehicles, patents, data network infrastructure, and computers,” it said.
“The Productivity Mega Deduction would permanently provide immediate expensing to a much wider range of assets and expenses (i.e., about two-thirds of investment in capital assets would be eligible). The estimated incremental fiscal cost of the measure is $36 billion over five years, beginning in 2026-27.
“Assets not eligible for immediate expensing will continue to receive an enhanced first-year deduction under the Accelerated Investment Incentive.”
In a LinkedIn post, Kim Furlong, CEO of the Retail Council of Canada, said: “The Retail Council of Canada welcomes the federal government’s introduction of the Productivity Mega Deduction.
“As the country’s largest private-sector employer and among the largest investors in supply chains and operational efficiency, retail relies heavily on continuous capital investment to keep goods moving and maintaining affordability for Canadians.
“Making immediate expensing permanent will accelerate those investments in modern logistics, distribution automation, and digital infrastructure—giving Canadian retailers the tools they need to continue to drive productivity and build a more competitive economy from the ground up.”
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