Details on extending the accelerated capital cost allowance program to 2015 were released by Flaherty at an auto parts plant in Brampton, Ont, as a crowd of uniformed workers looked on.
The extension was first announced in March in the federal budget.
"It matters and it works for manufacturers and processors in Canada," Flaherty said of the extended program. "It makes our business more competitive which is very important in the world market."
The measure, which involves a straight line 50 per cent depreciation rate instead of a declining one, has been used by about 25,000 businesses in Canada to buy new machinery, said Flaherty.
The minister pointed to growing investment in machinery and equipment by Canadian manufacturers, which went up 11.1 per cent in 2010 and was up 24.8 per cent in 2011.
The head of the Canadian Manufacturers and Exporters association said the tax break extension gives companies help with the capital they need to invest in improvements.
"The measures...not only makes Canadian manufacturers more cost competitive but their future is going to depend on the investments they make in new products, new markets and new technology," said Jayson Myers.
Earlier this week, Statistics Canada reported that Canadian manufacturing rebounded in July with a gain of 1.7 per cent, giving hope that the third quarter started off strong after a weak end to the second quarter.
Manufacturing sales totalled $49.5 billion for the month, better than economists had expected, with Ontario leading the way.
The economy had taken a 0.5 per cent dive in June as it was hit by the floods in Alberta and a construction strike in Quebec. The drop was the biggest monthly step back since the recession and dragged down quarterly growth to 1.7 per cent.
However, Statistics Canada reported Tuesday that manufacturing sales picked up in July to total $49.5 billion as gains were recorded in 15 of the 21 industries tracked and six provinces.