What Canada's New Investment Incentives Mean for Brand Owners Entering Canada
Canada has proposed one of the most significant changes to its business tax system in decades, and foreign brand owners considering Canadian operations should take note. On September 15, 2026, at the inaugural Canada Investment Summit in Toronto, the federal government announced the Productivity Mega Deduction. The measure would permit businesses to deduct the full cost of most new capital investments in Canada in the year those assets become available for use.
The Government of Canada has framed the measure as part of an effort to attract approximately $1 trillion in new investment. For foreign companies, the incentive may shorten the path from considering the Canadian market to committing capital to it. That decision, however, carries intellectual property consequences that are best addressed before the investment is made.
This article summarizes the incentive, identifies what it does not cover, and sets out the trademark steps that foreign associates may wish to raise with clients who are preparing to establish a presence in Canada.
The Incentive in Brief
The Productivity Mega Deduction would allow immediate expensing of most depreciable property acquired on or after September 15, 2026. It builds on the narrower Productivity Super-Deduction introduced in Budget 2025, which applied to a limited set of asset classes.
Several features distinguish the new measure:
Breadth. It extends to depreciable capital property generally, subject to a relatively narrow list of exclusions.
Permanence. The deduction is proposed to be permanent, with no sunset date or phase-out schedule.
Timing. The deduction may be claimed only in the first taxation year in which the property becomes available for use. If it is not claimed in that year, it is lost.
Competitiveness. The Department of Finance estimates that Canada's marginal effective tax rate on new business investment will fall from approximately 13% to 6.4%.
The government also announced that the Canada Revenue Agency will prioritize advance income tax ruling requests for investments of $1 billion or more, effective September 14, 2026.
The measure has been released as draft legislation and is not yet law. Its final form may change before enactment.
What the Incentive Does Not Reach
The incentive is directed at tangible capital investment. Under the draft legislation, the excluded property includes patents, franchises, certain licences for a limited period, and goodwill. Certain buildings and passenger vehicles are also excluded.
This distinction matters for brand owners. Budget 2025's Super-Deduction had extended immediate expensing to patents, and the interaction between that measure and the new deduction has not yet been fully settled. Where a Canadian entry involves the acquisition of a business, a portfolio of rights, or an exclusive licence, the allocation of the purchase price between eligible equipment and excluded intangibles may affect the tax outcome.
Those questions should be referred to Canadian tax counsel. From an intellectual property perspective, however, the point is straightforward: the brand itself receives no special tax treatment under this measure, and its protection must be planned on its own terms.
Why Trademark Protection Should Precede Investment
A brand owner should secure its Canadian trademark position before it announces or commits to a Canadian investment. Three features of the Canadian regime support that sequence.
Use is not required to register. Since the 2019 amendments to the Trademarks Act, an applicant need not establish use in Canada, or anywhere, to obtain a registration. This allows a foreign company to file well in advance of launch. It also allows third parties to do the same.
Public announcements attract opportunistic filings. A publicized expansion into Canada can prompt others to file applications for the same or similar marks. Bad faith is a ground of opposition and of invalidity, but contesting a filing through the Trademarks Opposition Board or the Federal Court is slower and costlier than filing first.
Examination takes time. Applications before the Canadian Intellectual Property Office can take a considerable period to reach examination. An application filed early is more likely to mature into a registration by the time the Canadian operation is ready to trade.
Brand owners may file directly with the Canadian Intellectual Property Office or designate Canada through the Madrid Protocol. Each route has advantages. A direct filing allows the goods and services to be drafted to Canadian practice from the outset. A Madrid designation is administratively efficient, but remains dependent on the base application or registration for five years and may draw examiner objections to specification wording.
Licensing and Corporate Structure
A foreign parent that establishes a Canadian subsidiary to carry on business should document the subsidiary's right to use the parent's marks. Corporate affiliation alone does not make the subsidiary's use the parent's use.
Under section 50 of the Trademarks Act, use by a licensee is deemed to be use by the owner only where the owner has direct or indirect control of the character or quality of the goods or services. A written licence with express quality-control provisions is the most reliable way to establish that control.
The point has practical consequences:
Maintaining registrations. Once a registration is three years old, it may be challenged for non-use in a section 45 proceeding. Use by an unlicensed Canadian affiliate may not be accepted as use by the registered owner.
Preserving distinctiveness. Uncontrolled use of a mark by several related entities can weaken its ability to identify a single source.
Aligning ownership. The registered owner in Canada should be the entity intended to hold the brand. Where rights are held by an IP holding company, the chain of title and any licences should be in place before goods are sold.
Where the investment involves acquiring a Canadian business, trademark due diligence should confirm the validity, ownership, and use history of the target's marks before closing.
A Checklist for Foreign Associates
Foreign associates advising clients on a Canadian expansion may wish to raise the following points before any public announcement:
Conduct clearance searches for the house mark, key product marks, and any French-language equivalents.
File Canadian applications, directly or by Madrid designation, covering current and planned goods and services.
Confirm which entity will own the Canadian registrations, and align that choice with the corporate and tax structure.
Put written licences with quality-control provisions in place for any Canadian subsidiary, distributor, or franchisee.
Where a Canadian business is being acquired, complete trademark due diligence before closing.
If the client will sell in Quebec, plan for registration in advance of launch and review packaging and signage with Quebec counsel.
Refer tax questions, including the treatment of intangibles under the new deduction, to Canadian tax counsel.
How Burk Law Can Assist
The Productivity Mega Deduction may make Canada a more attractive destination for foreign investment. The brands that accompany that investment, however, require protection that the tax measure does not provide.
Burk Law acts for foreign IP firms and their clients on Canadian trademark clearance, prosecution before the Canadian Intellectual Property Office, Madrid Protocol designations, opposition and section 45 proceedings before the Trademarks Opposition Board, and licensing.
We welcome enquiries from foreign associates whose clients are considering a Canadian expansion.
This article is provided for general information only and does not constitute legal or tax advice. The Productivity Mega Deduction remains in draft form and may change before enactment.
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