Ottawa's New Mega Deduction Is a Win for Ski Country, With More to Do
On September 15, the federal government introduced the Productivity Mega Deduction. It lets businesses write off the full cost of eligible capital investments in the year they buy them. This is a big step for investment and productivity across the Canadian economy. The announcement is an important outcome from coordinated effort by ski areas, industry associations, and tourism partners to demonstrate how competitive tax treatment can help unlock private-sector investment in Canada's tourism industry and the communities it supports.
For years, Canadian ski areas have depreciated assets like lifts and snowmaking equipment at 20 to 30 percent a year. U.S. operators can write off similar investments immediately. That gap made it harder for Canadian resorts to reinvest at the pace their American competitors could. Western Canada's ski area master plans identify $22 billion in potential investment, much of it waiting on the right conditions to move forward.
Advocacy Matters
TIAA begun Federal advocacy on the issue of competitive capital cost allowances last year during our annual Ottawa Hill Day. The announcement is an important outcome from coordinated effort by ski areas, industry associations, and tourism partners to demonstrate how competitive tax treatment can help unlock private-sector investment in Canada's ski industry and the communities it supports.
Earlier this summer, TIAA worked with the Tourism Industry Association of BC, Canada West Ski Areas Association, and The Canadian Ski Council to commission Levelling the Playing Field, a study by Verum Consulting. The report found that matching U.S.-style depreciation rules could increase five-year capital spending across western Canada's ski areas by 19 percent. It would also generate hundreds of millions of dollars in incremental visitor spending, GDP, and tax revenue.
The Mega Deduction moves the industry a long way toward that outcome. It expands immediate expensing from about 15 percent of capital investment nationally to roughly two-thirds. Equipment central to ski operations, including lifts and snowmaking systems, is included. This progress builds on years of work by the Canadian Ski Council and its regional associations.
Some gaps remain. Buildings are excluded from the new deduction. Base facilities, guest accommodations, and employee housing will not benefit the same way equipment does. These are investments that matter to a resort's ability to welcome guests and house its workforce. The ski sector was chosen for this study because its capital needs are well documented. The same competitiveness gap runs through other parts of Canada's tourism industry, including hotels and attractions, that have not yet been part of this conversation.
TIAA is glad to see government respond to the evidence our industry brought forward. We will keep advocating for the pieces of this picture that still need attention, so tourism operators across the country can compete and grow.
By the Numbers
Applying U.S.-equivalent depreciation schedules, which the new Productivity Mega Deduction closely mirrors for eligible equipment, creates a massive economic ripple effect for Alberta specifically:
Over the next five years, this type of tax treatment is projected to unlock $57 million in new, incremental capital investment at Alberta's ski areas.
This investment is forecast to drive $226 million in new visitor spending across the province.
It is also projected to create 2,380 full-time equivalent jobs in the province over the same five-year period.
Finally, this growth will yield an estimated $35 million in annual government tax revenues.
While the September 15 announcement permanently expands immediate expensing to roughly 65% of capital investments across the economy, the work isn't finished.
"Investing in tourism infrastructure is one of the fastest ways to drive national GDP and rapidly generate valuable export revenue." Darren Reeder, President and CEO, Tourism Industry Association of Alberta
The Competitiveness Gap Still Exists Across the Broader Tourism Sector
The multiplier effect of tourism capital is massive. Levelling the Playing Field analysis by Verum Consulting highlights exactly why industry must continue to advocate.
For every dollar of tourism-related investment in Canada, visitor spending increases by 3.9.
The Productivity Mega Deduction is a massive win, but it's only step one. While the federal government has made it easier to buy lifts and snowmaking equipment, a world-class resort cannot function without a place for its workforce to live and its guests to stay.
With many tourism asset classes and real tourism property excluded, TIAA sees a distinct opportunity for the Province of Alberta to step in and supercharge this momentum across other sectors of the visitor economy.
To that end, TIAA will soon be releasing a new report titled Strengthening Alberta’s Tourism Financing Framework. It will outline how the province can fill these remaining gaps, unlock private capital, and make Alberta the most competitive jurisdiction on the continent for new tourism investment.
