Proposed federal legislation could streamline federal approvals for major projects—a critical development that carries tax considerations for Canadian businesses.
Bill C-39, which is the latest measure intended to bolster investment in Canada, is divided into three main components—with project approvals for major capital investment being the most pressing concern for businesses.
The legislation, which was introduced in the House of Commons on Sept. 21, 2026, would not directly change tax rates, deductions or credits. However, its potential to speed up project timelines could affect when businesses incur capital costs, put assets into use and access tax deductions and investment tax credits (ITCs).
The tax implications of Bill C-39 extend beyond investment timing considerations—especially for businesses planning major projects, operating in federally regulated sectors or relying on Canada’s ports. Regulatory and compliance costs may require businesses to consider if and when the amounts are deductible or form part of the tax cost of related capital property. Project ownership, financing and labour arrangements may also affect access to certain incentives.
Since the legislation carries wider planning implications and compliance considerations, businesses should consider these proactive steps—in consultation with the appropriate advisors—to better understand the after-tax costs before committing capital:
- Modelling regulatory timelines alongside tax incentive deadlines.
- Determining when major assets are expected to become available for use.
- Reviewing the tax treatment of regulatory and compliance costs.
- Assessing applicable labour requirements.
Major projects: Connecting approval timelines and tax incentives
For tax purposes, timing is an essential consideration—particularly as Bill C-39 proposes a more coordinated federal approval process.
Many capital cost allowance (CCA) measures enacted previously through Bill C-15 depend on when qualifying property is acquired and becomes available for use. Enhanced first-year CCA and immediate expensing are available for certain qualifying property—subject to specific effective dates and phaseouts.
Timing can also affect clean economy ITCs. For example, the regular carbon capture, utilization and storage ITC rates are generally reduced by half for qualifying expenditures incurred from 2036 through 2040.
Canada’s new productivity mega-deduction further expands immediate expensing to eligible property acquired on or after Sept. 15, 2026; such investments could include pipelines, railway infrastructure, bridges and roads. If the deduction is enacted as proposed, approximately two-thirds of investment in capital assets would be eligible for immediate expensing—compared to about 15 per cent under the earlier productivity super-deduction.
Bill C-39 could reduce the importance of some temporary CCA deadlines, but not all property would qualify. Acquisition dates, available-for-use dates and asset eligibility would remain important when determining the timing of deductions.
Separately, the CRA announced it will prioritize advance income tax ruling requests related to investments of $1 billion or more in Canada. This may provide greater tax certainty for businesses before they commit significant capital to projects.
For large projects built in phases, businesses should also consider when individual assets become available for use—rather than focusing solely on the project's overall completion date. Faster regulatory approval may not necessarily mean that all related tax deductions or credits would become available at the same time.
Project ownership and entity structure can also affect ITC eligibility. Businesses should remain cognizant of these implications when establishing project entities or bringing new investors into a project early, rather than waiting until construction begins.
Another critical consideration is whether future asset sales, reorganizations or changes in use could trigger a recapture of previously claimed ITCs.
Businesses should also model the cash tax and financing effects of deductions and refundable ITCs, including the timing difference between when project costs are funded and when the related tax benefit is realized.