Canadian Economic Update Report
Whitehorn Capital's Canadian Economic Update presents performance trends, economic drivers, and transaction activity observed during the past quarter nationwide, with a focus on Western Canada.
Public Market Dashboard
Year to date as of September 30, 2026.
Macroeconomic Updates
The following sections cover key macroeconomic drivers for Canadian business owners and leaders.
Write it off.All of it.
Ottawa is proposing a tax change called the Productivity Mega Deduction. It would change how quickly you can deduct the cost of new equipment: instead of claiming a bit each year for a decade, you would claim the whole thing in year one. Here is what it would mean for your business.
Not to be confused with the Productivity Super-Deduction, the narrower measure from Budget 2025. The Mega Deduction is the bigger one, and it replaces most of what the Super-Deduction did.
What you could write off in year one on a $1 million machine
General equipment, first taxation year
Example uses general equipment written down at 20% a year. The figure for your own purchase depends on the type of asset. Confirm it with your accountant.
The short version
When you buy equipment today, you write off a portion of the cost each year over many years. Under the proposal you would write off the entire cost in the year you start using it, so your tax bill drops sharply in the year you invest.
Prime Minister Carney announced the Productivity Mega Deduction on 15 September 2026 and the Department of Finance released draft legislation the same day. It is not law yet.
You would not get more. You would get it sooner.
This is the part people misread. You always got to deduct the full cost of a machine eventually. What changes is the timing, and in a business, cash today is worth considerably more than the same cash spread over ten years.
Share of business purchases that would qualify for a full first-year write-off
Before the change, and under the proposal
Source: Department of Finance Canada backgrounder, 15 September 2026.
What qualifies
Most things a business buys would be covered. The exclusions are the shorter list.
Write it off in full
- Machinery and equipment
- Software and computers
- Vehicles, trucks and trailers
- Oil and gas pipelines
- Mining property
- Fibre-optic cable and data networks
- Aircraft, rail track, bridges and roads
- Patents and research spending
Written off slowly, as before
- Buildings
- Goodwill and licences when you buy a business
- Natural gas pipelines running into homes
- Passenger cars, taxis, and rental or leased vehicles, unless the vehicle is new and was assembled in Canada
- Quarries, and timber and cutting rights
Eligibility is set by the tax category an asset falls into, not by what you call it. Two similar-looking purchases can land on opposite sides of this line, so check each one.
Three details that matter out west
Where the general rule has a specific exception
-
01
Not every pipeline is treated the samePipelines carrying oil and gas would qualify. The regulated gas lines that run into homes would not.
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02
For cars, where it was built decides itWork vehicles generally qualify. Passenger cars, taxis and rental or leased vehicles do not, unless the vehicle is new and was assembled in Canada.
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03
LNG has its own rule, backdated furtherLiquefaction equipment would be covered from 4 November 2025, earlier than everything else, but the deduction could only be claimed against income from liquefaction at that facility.
What it is worth
Take a company buying a $1 million machine that goes into service this year. British Columbia, Saskatchewan and Manitoba all tax general business income at the same combined rate, so they are shown together. Alberta is lower.
First-year tax saved on a $1 million machine
Combined federal and provincial rates on general business income, 2026
23% combined rate
27% combined rate
Swipe to see both
Illustrative. Assumes the business has enough taxable profit to use the full deduction, and general equipment written down at 20% a year. Saskatchewan taxes manufacturing and processing income at a lower combined rate of 25%, so a Saskatchewan manufacturer would save about $250,000 rather than $270,000. Income taxed at the small business rate produces a smaller saving. Provinces must also adopt the federal change for the provincial share to apply.
Why this one is different
Ottawa has offered faster write-offs before. Every version came with a catch: a time limit, a dollar cap, or a narrow list of industries. This one has none of the three.
Federal investment incentives, 2018 to 2026
What each one offered, and what limited it
Faster write-offs on equipment. Temporary, and began phasing out in 2024.
Full write-off for small companies. Capped at $1.5 million a year.
Clean economy tax credits. Green projects only, phasing down to 2034.
Productivity Super-Deduction. About 15% of assets, with a phase-out.
Productivity Mega Deduction. No cap, no industry limit, no expiry.
The practical difference is that you would no longer have to rush a purchase to beat a deadline. For the first time in a decade, capital spending could be timed around what the business actually needs.
Where it stands
It is not law yet, and no date has been set. Here is the path from here.
15 September 2026, with draft legislation released the same day.
Usually folded into a budget bill. On recent form that points to 2027, but the government has not committed to a date and does not hold a majority.
Would apply to purchases made from 15 September 2026, even though it passes later.
Three things that catch people out
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01
It counts when you start using the assetNot when you order it, sign for it or pay for it. A machine sitting in a crate does not qualify. On long lead-time equipment this decides which tax year you land in, and it is the most expensive mistake to make.
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02
You need profit to use itA write-off only saves tax if there is income to offset. Without it you create a loss to carry forward, which is worth less and worth it later.
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03
Used and related-party purchases are restrictedProperty you or a connected company already owned, or that comes across on a tax-deferred transfer, would generally be excluded. Moving an asset between your own entities will not create a fresh deduction.
Our view
This rewards two things together: being profitable, and investing. If your business has both, the value is immediate and material. If it has only one, the benefit is smaller than the headline suggests and timing matters far more.
Because the measure would be permanent, the strategic point is not urgency. Capital spending no longer has to be squeezed into a closing window, so equipment decisions can be made on operating grounds and then timed for tax rather than the other way around. For owners weighing a sale, it also improves what a buyer can do with the business after closing, which supports reinvestment and valuation.
What we would do now: take your capital plan for the next two years to your accountant, confirm which items qualify, and model the cash effect before committing. Plan on the assumption it passes broadly as drafted, but do not spend the saving until it does.
Select Merger & Acquisition Transactions
Notable Western Canadian transactions this past quarter.
| Date | Acquirer | Acquirer HQ | Target | Target HQ | Sector |
|---|---|---|---|---|---|
| July 2026 | Collective Waste Solutions | Calgary, AB | City Disposal and City Ecobag | Edmonton, AB | Industrial |
| Acquisition of front load, roll-off and bin collection services provider as well as fencing and construction waste bulk bag services to expand commercial and construction services platform in Edmonton. | |||||
| July 2026 | Service Logic Holdings Canada | Various | Custom Air Conditioning | Port Coquitlam, BC | HVAC |
| Acquisition of majority interest in commercial mechanical services (HVAC/R, plumbing and electrical services) provider across 4 locations from CAI Capital Partners. | |||||
| July 2026 | NordSpace | Markham, ON | North Vector Dynamics | Calgary, AB | Defence |
| Strategic investment in defence and autonomy company supporting high speed and hypersonic aeropropulsion technologies used for missiles or space launches. | |||||
| July 2026 | Allied Universal | Irvine, CA | SSC Security Services | Regina, SK | Commercial services |
| Acquisition of public holding company investing in physical, electronic and cybersecurity businesses. | |||||
| Aug. 2026 | DXP Enterprises (NASDAQ:DXPE) | Houston, TX | Mequipco | Calgary, AB | Distribution |
| Acquisition of mechanical equipment used in water and wastewater systems manufacturer representative for municipal and industrial applications with three locations generating $9.9MM EBITDA to scale Canadian water business. | |||||
| Aug. 2026 | Trimac Transportation | Calgary, AB | California Freight Sales | Ripon, CA | Logistics |
| Acquisition of food-grade bulk logistics providers operating eight truck terminals, a warehousing terminal and brokerage facility across CA and NV to expand bulk food-grade logistics capabilities. | |||||
| Aug. 2026 | Exchange Income (TSX:EIF) | Winnipeg, MB | TerraPro | Sherwood Park, AB | Environmental services |
| $30MM acquisition of provider of access, rig and crane mats, terrain protection, civil construction, reclamation, remediation and recycling services. | |||||
| Sep. 2026 | AutoCanada (TSX:ACQ) | Edmonton, AB | Doug's Place Southgate | Edmonton, AB | Commercial services |
| Acquisition of collision repair business with 7,540 sq ft of capacity to enhance efficiency and to add capacity to existing footprint. | |||||
| Sep. 2026 | HMFT | Ajax, ON | Canadian Industrial Pumps | Surrey, BC | Distribution |
| Acquisition of fluid handling equipment distributor and services provider to strengthen pump portfolio and technical depth. | |||||
| Sep. 2026 | Central Builders' Supply | Courtenay, BC | Lumberworld Operations | Victoria, BC | Distribution |
| Acquisition of building materials and construction products supplier to strengthen Vancouver Island's market presence. | |||||
| Sep. 2026 | Highfield Investment Group | Calgary, AB | Century Mile Racetrack and Casino and Century Downs Racetrack and Casino | Alberta | Consumer discretionary |
| $23.2MM acquisition of the racing and gaming operations of Edmonton and Calgary based entertainment centres from Century Casinos (NASDAQ:CNTY) at a 6.1x FY2025 EBITDA multiple. | |||||
| Sep. 2026 | Grindr (NYSE:GRND) | West Hollywood, CA | PurposeMed | Calgary, AB | Healthcare services |
| US$250MM acquisition of secured virtual care platform connecting healthcare providers with patients nationwide including Freddie and Affirming Care Pharmacy. | |||||
