Canada’s nation-building agenda offers timely tax opportunities for businesses

The federal government’s new “Canada Strong” plan introduced targeted funding and tax incentives to accelerate nation-building projects, enhance economic resilience and strengthen Canada’s global competitiveness.

To support these projects, the plan introduced several tax measures focused on incentivizing large-scale projects and established a national sovereign wealth fund. These measures are intended to put Canadian businesses in a prime position to drive growth and enhance the country’s global long-term competitiveness.

About the nation-building plan

The plan was initially introduced in the 2025 federal budget (Budget 2025) and reinforced in the 2026 spring economic update (Economic Update).

It’s focused on developing nation-building infrastructure projects and expanding access to new markets for the country’s natural resources comes amid economic uncertainty posed by ongoing global conflicts, trade pressures and domestic housing shortages.

Although there is no formal definition of nation-building projects, the federal government indicated that initiatives in areas such as energy, trade, critical minerals, transport and data would qualify. This list is not intended to be exhaustive, as other projects geared towards supporting Canadian economic independence and resilience may also qualify.

As part of its plan, the government aims to reduce investment barriers and support large-scale development across industries by leveraging a new national sovereign wealth fund alongside enhanced tax credits and advanced tax rulings.

Examining the core aspects of the plan is critical for businesses to make the most of available opportunities.

Advanced income tax rulings

Large-scale projects often involve complex transactions, which could create uncertainty around tax compliance and estimating liability.

These, in turn, could delay project timelines—so the Economic Update proposed prioritizing advance income tax rulings for nation building projects. This move is supported by Budget 2025’s $146 million investment to enhance Canada Revenue Agency’s (CRA) capacity.

Advance income tax rulings are often non-binding determinations from the CRA on the tax treatment of transactions and tax planning. Under certain circumstances, the rulings can be administratively binding to specific taxpayers.

Regardless of whether the ruling is binding, it does not prevent the courts from applying its interpretation of the law and revocation of such ruling where circumstances change or errors emerge.

Under the government’s new approach, priority will be given to rulings related to housing, infrastructure, national priority projects and productivity-enhancing investments. This shift is intended to reduce delays that may arise from uncertainty or misinterpretation of tax legislation.

While this measure provides some certainty for businesses undertaking eligible projects, it may have implications for other tax rulings. Prioritizing large-scale projects could lead to longer processing times for other complex tax matters. It also remains unclear how the federal government will determine projects eligible for priority rulings.

Credits and incentives

Canadian businesses involved in these nation-building projects can also take advantage of the following credits and deductions introduced in Budget 2025 and the Economic Update.

Productivity super-deduction

Budget 2025 and the Economic Update introduced amendments to capital cost allowance (CCA), including accelerated rates and immediate expensing for eligible assets.

To encourage investment in lower-emission liquified natural gas (LNG) facilities, the accelerated CCA rates for eligible LNG equipment and related buildings were reinstated. Eligible buildings used to manufacture or process goods for sale or lease can also benefit from immediate expensing, including the cost of additions or alterations.

These CCA measures align with the government’s nation-building agenda by maintaining accelerated rates and immediate expensing to help advance major projects and enhance Canada’s global competitiveness.

National sovereign wealth fund

The federal government introduced its first national sovereign wealth fund—known as the Canada Strong Fund—on April 27, 2026.

With an initial federal contribution of $25 billion over three years, the fund will invest in eligible Canadian projects and businesses across sectors like clean and conventional energy, critical minerals, agriculture and infrastructure. All investment decisions overseen by a new arm’s-length Crown corporation.

The fund is also meant to include a retail investment product, allowing Canadians to participate directly in its growth.

While the first national sovereign wealth fund presents significant potential, there remains ambiguity regarding eligibility and investment allocation.

It is expected to focus on encouraging companies to develop energy, transportation and telecommunications infrastructure. However, critical aspects such as eligibility criteria and potential concentration of funding are not yet clear.

There is also uncertainty regarding the structure and tax treatment of the retail investment product. A registered product could offer tax deferral or exemption benefits, while a non-registered option may result in additional tax exposure for investors.