Canada Offers Immediate Tax Write-Offs on Capital Investment to Draw Foreign Funds

Canada will allow businesses to immediately write off the cost of most new capital investments for tax purposes, Prime Minister Mark Carney announced on Tuesday, as he opened a summit aimed at drawing foreign capital into the country.

Speaking in Toronto, where dozens of global investors have gathered this week, Carney said the measure is intended to strengthen the economy and attract overseas investment. He said two-thirds of all assets would qualify for the new benefit, including machinery, manufacturing equipment, software, patents, research and development, pipelines, and fiber and rail networks.

"The effect is straightforward. When you invest in Canada, you can deduct substantially more of that investment immediately," he said in his opening remarks.

According to a government statement, the change will bring Canada's marginal effective tax rate on new business investment down from roughly 13% to 6.4% — described as the lowest among major economies and less than half the rate in the United States.

The summit is part of Carney's push to secure C$1 trillion in investment over the next five years by cutting red tape and advancing mining, energy, technology and infrastructure projects. He has sought to address long-standing concerns about a slow and cumbersome regulatory regime and a shortage of large-scale, investment-grade projects.

"Canada will remain a country of high standards. But high standards do not require slow decisions," he said, repeating a commitment to shorten the review period for major projects.

Carney also said Canada is seeking private investment through long-term concessions to operate the country's four largest airports — Toronto, Montreal, Calgary and Vancouver. The government would retain ownership of the underlying land and assets while bringing in new capital and expertise to their operations and growth, he said.

Two asset managers said on the sidelines of the summit that they would be interested in investing in airports. Canadian labor groups have opposed privatization, arguing it would raise costs for travelers.