Overview

The Productivity Super-Deduction came in with Budget 2025 (November 4, 2025). It isn’t a single new deduction. It groups several faster capital cost allowance (CCA) write-offs so businesses can deduct more of the cost of new capital investment right away . The government says it lowers Canada’s marginal effective tax rate from 15.6% to 13.2%, the lowest in the G7 . The implementing law, Bill C-15, received Royal Assent on March 26, 2026.

Who qualifies

Any business that buys eligible depreciable property and claims CCA can use it. The government expects capital-intensive industries, especially manufacturing and processing, to benefit most.

What qualifies

These assets get a 100% first-year write-off:

• Manufacturing or processing machinery and equipment
• Clean energy generation and energy conservation equipment
• Zero-emission vehicles
• Productivity-enhancing assets: patents, data network infrastructure and computers
• Capital spending on scientific research and experimental development (SR&ED)

Two other pieces have their own rules:

• Manufacturing or processing buildings: 100% write-off for buildings acquired on or after November 4, 2025 and first used for manufacturing or processing before 2030. At least 90% of the floor space must be used that way. The rate drops to 75% if first used in 2030–2031 and to 55% in 2032–2033.
• Other assets: most other depreciable assets get a larger first-year deduction under the reinstated Accelerated Investment Incentive. Low-carbon LNG facilities also get faster write-offs.

Newer “Mega Deduction”

On September 15, 2026, the government announced a broader Productivity Mega Deduction. It would make immediate expensing permanent and widen it from about 15% to about two-thirds of capital investment.

• Included: most depreciable property acquired on or after September 15, 2026, such as software, fibre-optic cable, mining property, pipelines, aircraft, rail track, bridges and roads.
• Property bought used: can qualify only if it wasn’t bought from a non-arm’s-length person and no one has already claimed CCA on it.
• Excluded: Class 1 and 3 buildings, goodwill, franchises and licences (Classes 14 and 14.1), Class 51 gas distribution pipelines, and certain Class 10 and 10.1 passenger vehicles. Manufacturing buildings keep the separate building write-off described above. The Mega Deduction has only been released as draft legislation so far, so the details could still change before it becomes law.