Canadian Railway Association Calls for 100% Immediate Depreciation in Transportation and Warehousing Sector

en.Wedoany.com Reported - On September 2, the Railway Association of Canada (RAC) called on the Canadian government to extend the 100% immediate depreciation policy to the transportation and warehousing sector, allowing businesses to deduct eligible capital investments in full before tax in the year they are incurred. The proposal is currently an industry policy recommendation and has not yet become an official tax policy of the Canadian government or entered the legislative implementation stage.

An independent economic analysis commissioned by the Railway Association of Canada and conducted by Giroux Strategies shows that if the 100% immediate depreciation policy were applied to the transportation and warehousing sector, it is expected to generate approximately CAD 591 million in new private investment annually and add approximately CAD 887 million to gross domestic product. The findings also indicate that for every CAD 1 in net federal fiscal cost, CAD 1.79 in private investment and CAD 2.70 in annual GDP growth would be generated.

The study estimates that the federal fiscal cost of implementing this policy would account for approximately 0.07% of Canada's federal tax revenue, below 0.1%. The Railway Association of Canada proposed that, building on the Canadian government's existing Capital Budgeting Framework and the Productivity Super-Deduction policy, the accelerated capital cost recovery mechanism should be extended to cover freight transportation and warehousing infrastructure and equipment investments.

Citing data from Canada's 2025 budget, the Railway Association of Canada noted that among major economic sectors, transportation and warehousing is currently the only sector in Canada where the marginal effective tax rate is higher than that of the corresponding sector in the United States. Given that the United States has already implemented a permanent 100% depreciation mechanism, the association cites this tax differential as one of the primary justifications for the policy proposal.

The scope of this policy proposal covers not only railway companies but the entire transportation and warehousing sector in Canada. The potential capital investment scope addressed by the report includes infrastructure and equipment used for freight transportation and supply chain operations. The Railway Association of Canada has now made the full economic analysis publicly available and has positioned the expansion of 100% immediate depreciation as its tax policy initiative submitted to the federal government.