Productivity Super Deduction
The term Productivity Super Deduction is used in the budget documents as a collective term for numerous fast-write-off tax incentives that are being introduced, re-introduced, or extended.
Tax incentives introduced:
- Full write-off for buildings used for manufacturing and processing (M&P)
- Applies to buildings acquired on or after Nov. 4, 2025, and used for M&P before 2030.
- Subject to a four-year phase out for the period between 2030 and 2033 (75% first-year write-off for qualifying buildings acquired in 2030 and 2031 and 55% first-year write-off for qualifying building acquired in 2032 or 2033).
- Buildings must be used at least 90% (based on square footage) for M&P.
- Provision will be made for significant additions or renovations.
- Purchased buildings may qualify, but only if acquired arm’s length and not acquired via a rollover transaction.
- Specific technical details are pending, amendments were not provided with budget 2025.
Tax incentives re-introduced or extended:
- Full write-off of scientific research and experimental development (SR&ED) capital expenditures.
- Accelerated capital cost allowance for liquefied natural gas equipment and buildings:
- This previously expired on Dec. 31, 2024.
- Measures will be re-introduced for low carbon liquified natural gas facilities.
- Accelerated investment incentive: Providing enhanced first year write-off for most capital assets.
- Immediate expensing for M&P equipment, clean energy generation, energy conservation equipment, and zero-emission vehicles.
Scientific research and experimental development (SR&ED)
Significant changes to qualifying SR&ED expenditures and related investment tax credits were made in December 2024, and re-introduced in draft legislation released Aug. 15, 2025. These changes are summarized here.
Budget 2025 proposes to increase the expenditure limit for the enhanced 35% refundable tax credit to $6 million, from the current $3 million.
In addition, the government plans to make changes to streamline SR&ED application processes to improve the filing experience for taxpayers.
Clean technology tax credits
Budget 2025 proposes to extend or modify the significant clean economy tax credits that were introduced in 2023 and expanded in the 2024 Fall Economic Statement to enhance incentives for investments in:
- Clean technology manufacturing;
- Carbon capture and storage; and,
- Clean electricity.
Contact BDO’s tax team for more information
The information in this publication is current as of November 4, 2025
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