The Agricultural Producers Association of Saskatchewan is welcoming a new federal tax proposal it says could encourage farmers to invest more heavily in machinery, equipment and productivity-enhancing technology.
APAS said in a statement Thursday that the proposed Productivity Mega Deduction closely matches its longstanding call for faster writeoffs of capital investments in agriculture. Under the proposal, most eligible depreciable capital property acquired on or after Sept. 15, 2026 could be fully deducted in the year it becomes available for use, rather than written off gradually through the existing Capital Cost Allowance system.
“APAS asked for this, and the federal government has now proposed it,” said APAS President Bill Prybylski. “For a capital-intensive industry like agriculture, allowing producers to immediately expense eligible investments can help farms modernize, improve productivity and remain competitive.”
For farmers, eligible property is expected to include much of the machinery and equipment commonly used in crop production, including tractors, combines, seeders and sprayers, subject to the final legislation and applicable tax rules.
APAS said the measure could be particularly important for Saskatchewan producers facing high equipment costs and strong international competition.
“For Saskatchewan producers facing high capital costs and intense international competition, policies that encourage investment can make a real difference,” Prybylski said. “This is an important step toward strengthening farm productivity, competitiveness and Canada's long-term food security.”
The federal government announced the Productivity Mega Deduction on Sept. 15 as an expansion of the Productivity Super-Deduction introduced in Budget 2025. While the earlier measure provided immediate expensing for a narrower group of assets, the new proposal would permanently extend immediate expensing to roughly two-thirds of capital investment. Finance Canada estimates the measure would cost about $36 billion over five years.
Finance Canada estimates the proposal would have a particularly large impact on agriculture and fishing, lowering the sector’s marginal effective tax rate on new investment from 7.6% to minus 6%, the APAS statement said.
Nationally, the government estimates the overall marginal effective tax rate on new business investment would fall to 6.4%.
The proposal is not yet law. Draft legislation has been released and still requires parliamentary approval.
“APAS welcomes the direction of the proposal and will be watching the legislation closely to ensure the final measure works effectively for farmers and ranchers,” Prybylski said.
