Carney: Canada to allow immediate expensing for most new capital investment

The Canadian government has announced plans to allow immediate expensing for most new capital investments in an effort to stimulate business capital spending across the country. The proposed tax policy change enables corporations to write off the full cost of qualifying capital assets in the year they are acquired, accelerating tax deductions and improving corporate cash flow through the time value of money. This initiative builds on previous measures, including 2018 provisions for machinery and subsequent additions for clean energy equipment and building materials. Despite the pro-growth tax incentives, the Canadian dollar fell for a fifth consecutive day amid broad strength in the US dollar driven by Federal Reserve rate hike expectations. The domestic economic outlook remains challenged by persistent inflation linked to geopolitical conflicts, with financial markets currently pricing in up to five Bank of Canada rate hikes through 2027. These looming monetary tightening expectations represent significant headwinds for corporate borrowing costs and Canada's already vulnerable housing sector.