Is it ok to contact multiple potential supervisors? I have applied for MASc. (graduate research) programs in Canadian universities and there is a requirement to have a supervisor. 

My question is: Should I contact more than one professor from the same department of a University with similar interests? What would happen if more than one professor shows interest in me? How would I deny the acceptance of other professors and just choose one without giving a rude impression? Would it be better to be honest upfront and mention about "contacting more than one professor" in the emails?

I want to contact more than one professor as I am not sure about the situation of the professor i.e. They might be on sabbaticals, leaves or might not be taking any more applicants, which might cause them to reject me and I won't have enough time to contact another professor (also, I personally feel that this method is rude).
Yes, you can contact several. But before you contact anyone, make sure that your interests and background align with their specialties. If your letter states that you are exploring your alternatives and seeking an advisor, rather than specifically asking if they will be your advisor, it will be easier for you to "disappoint" one or more of them by choosing another, assuming you get a lot of interest. "I'm interested in potentially being your student and ..." 

If it is possible for you to actually visit the institution, you could try to have face to face visits with some of the faculty. Try to visit them in roughly the same order of your interest in them and if you "hit it off" with one, you are done.