The new federal budget marks a real shift for Canada’s industrial sector. Rather than adding new hurdles, the government is doubling down on tax incentives designed to fast-track decarbonization and drive much-needed modernization across production lines. At the heart of these measures is the accelerated capital cost allowance, better known as the ‘super-deduction.’ This powerful tool allows companies to immediately deduct 100% of their investments in clean equipment and technologies from their federal taxable income.

Quebec is signaling that it’s ready to follow suit. The province plans to extend, and enhance, the accelerated depreciation measures introduced in 2018 for another five years, with the hope that the program will also apply to boosting production capacity and updating critical manufacturing processes.

This measure is more than just a bookkeeping perk. It strengthens cash flow in the very first year and boosts overall project profitability.

How does the super-deduction work?

Traditionally, industrial investments are depreciated over several years, spreading tax savings across a long timeline. With the super-deduction, the entire cost becomes immediately deductible from federal taxable income.

• Federal tax rate: 15%

• Quebec tax rate: 11.5%

This means a $2 million project generates an instant federal tax benefit of $300,000 ($2,000,000 × 15%) outside Quebec, and $520,000 in Quebec ($2,000,000 × 26.5%).

Impact on profitability

Let’s look at a concrete example:

• Project cost: $2 million

• Annual savings: $400,000

• Accelerated deduction (CCA): $300,000 (federal), $520,000 (federal + Quebec)

• Return on investment (ROI): 5 years without the super-deduction, 4.25 years with the federal measure and 3.7 years with both federal and Quebec measures.

Without the super-deduction, the ROI sits at 5 years. The federal super-deduction alone brings this down to 4.25 years by delivering an immediate tax gain. When the Quebec accelerated depreciation is added, the ROI drops even further, down to just 3.7 years.

Act now to turn this opportunity into a competitive advantage

The super-deduction represents a strategic opportunity for manufacturers to:

• Improve cash flow from the very first year.
  
  

• Reduce the financial risk of decarbonization projects.
  
  

• Increase overall profitability without waiting years for depreciation to kick in.
  

This measure applies to eligible assets acquired as of budget day and that are put into use for the first time before 2030. After that, the enhanced CCA rate will gradually phase down: 75% in 2030–2031, 55% in 2032–2033, and no enhanced rate after 2033.

Every month without action means lost tax savings, and lost ground technologically compared to your competitors. The energy transition is no longer a constraint; it’s a strategic advantage.

Reach out to ATIS Énergie today to see how we can help you capture these new opportunities.