Canada tax score up after Productivity Mega Deduction

We raised Canada’s tax friendliness score from 5.2 to 5.5 on Country To Live. On 15 September 2026, the Prime Minister’s Office announced a Productivity Mega Deduction that widens immediate expensing and, by Ottawa’s own estimate, cuts the marginal effective tax rate on new business investment from roughly 13% to 6.4%.

This is a data call for people comparing how tax rules treat new investment and business setup. It is not advice to incorporate in Canada, and it is not a personal tax forecast.

What Ottawa changed for investors

• Immediate write-offs got much wider. The PMO release says eligible assets rise from about 15% of the capital stock to more than 65%, including software, fibre, R&D, vehicles, patents, and major infrastructure classes.
• The cost of investing falls on paper. Ottawa claims the marginal effective tax rate on new business investment drops to 6.4%, described as the lowest among major economies and less than half the US rate in the same briefing.
• The incentive is meant to stick. The government says immediate expensing is being made permanent so firms can recover eligible capital costs in the first year the asset is available for use.
• This sits on earlier cuts. Budget 2025 already introduced a narrower “Productivity Super-Deduction.” The September 15 measure expands that logic rather than inventing a one-day gimmick.
• We only moved tax friendliness. Housing, jobs, and residency pathway scores stay put. This update is about investment tax treatment, not everyday grocery prices or visa queues.

How we use this score

Tax friendliness on Country To Live tracks how welcoming the tax system feels for earners and new business investment that movers notice when they compare bases. A 5.5/10 is still mid-pack, not a low-tax paradise. It does mark a clearer federal push on capital cost recovery.

If Canada is on your shortlist, open the Canada country page, run Canada vs United States or Canada vs United Kingdom, or drop Canada into the compare tool. Peers such as the United States and Australia remain useful checks if corporate and capital tax rules are your swing factor. Browse all country scores to see where this raise lands.

If tax rules are your swing factor

1. Separate personal income tax from this business investment write-off. Paycheque rates and provincial brackets still matter more for most remote employees.
2. Ask a Canadian tax advisor whether your planned assets actually qualify before you treat 6.4% as your number.
3. Pair this score with housing affordability and residency pathway. A friendlier capital cost rule does not fix rent or immigration timing.

We will update again if the deduction is narrowed in legislation, delayed, or offset by new levies that change the mover-facing tax picture.

This note explains our editorial scoring only. It is not legal, tax, or relocation advice.