The Announcement
Prime Minister Mark Carney announced the Productivity Mega Deduction on 15 September 2026 at the first Canada Investment Summit in Toronto. The measure lets a business deduct the full cost of an eligible asset in the first year the asset becomes available for use. The Department of Finance released draft legislative proposals and a backgrounder the same day.
Immediate expensing covered roughly 15 per cent of depreciable assets under the Budget 2025 Productivity Super-Deduction. The new measure lifts that share above 65 per cent and makes immediate expensing permanent.
Carney states that Canada’s marginal effective tax rate on new business investment falls from roughly 13 per cent to 6.4 per cent.
Hotel Buildings Sit Outside It
The backgrounder and the draft legislation exclude buildings, including additions and alterations, in CCA Class 1(q) and Class 3(k). Hotel building shells and building-level renovation therefore fall outside immediate expensing. Manufacturing and processing buildings keep the treatment they received under the Budget 2025 measure.
Furniture, fixtures and equipment sit in Class 8. The exclusion list does not name that class, and computer equipment appears on the eligible list. Hotel FF&E reinvestment therefore qualifies.
What Is In
The government names fibre-optic cable, mining property, oil and gas pipelines, software, research and development, computer equipment, aircraft and vehicles, patents, rail track, bridges and roads.
Eligible depreciable property must be acquired on or after 15 September 2026, and the deduction is taken in the year the asset becomes available for use. Osler reports the Department of Finance backgrounder’s estimate of the incremental fiscal cost at CAD 36 billion over five years from 2026-27. The same backgrounder puts the increase in economic activity between 1.4 and 3 times the federal cost, up to around CAD 22 billion annually, with long-term employment increases of up to 80,000 jobs a year ten years out.
Hotels Canada Called It Significant
Hotels Canada, the national hotel association, called the announcement significant news for hotel investors and operators in Canada. The association stated that expanding immediate expensing to a broader range of capital investments has the potential to improve the economics of hotel development, renovation and reinvestment across the country.
The association stated it is encouraged to see the federal government advancing the tax measures it has advocated for over the past 18 months, including enhanced capital cost allowance treatment. It stated a more detailed assessment follows in the coming days. Its statement carries no figure for the value of the deduction to a hotel project.
The Ask That Did Not Land
Recommendation 1 of the Hotels Canada 2026 Pre-Budget Submission reads: introduce an Accelerated Capital Cost Allowance with a 100% write-off in the first year for new hotel buildings, renovations, and equipment.
The new deduction covers the equipment. The building element of the ask was not granted.
The same submission puts hotel capital assets at approximately CAD 74 billion, with CAD 3.4 billion worth of assets in the pipeline. It reports 243 hotel projects abandoned in Canada since 2019, including 95 in the past year, a loss of 11,210 rooms and approximately CAD 5 billion in capital investment. It projects a shortfall of nearly 20,000 hotel rooms by 2030, at an estimated cost of CAD 5 billion annually.
What Comes Next
The measure sits in draft legislative proposals. Parliament has not passed it. Hotel investors with renovation plans wait on the association’s assessment and on the legislative calendar.