Canada’s Minister of Finance presented the 2026 federal budget, outlining tax and administrative measures affecting individuals, families, business owners and Canadian businesses. This update begins with the full personal tax measures and planning considerations, followed by the business tax measures. Unless otherwise noted, the proposals remain subject to legislation and may change before enactment.

Personal tax update

Federal personal tax rates

The federal marginal rates are unchanged, while the taxable-income brackets and basic personal amount are indexed.

Federal personal tax rates

2025 taxable income	2025 rate	2026 taxable income	2026 rate
$0 to $57,375	14.5%	$0 to $58,523	14%
$57,375 to $114,750	20.5%	$58,523 to $117,045	20.5%
$114,750 to $177,882	26%	$117,045 to $181,440	26%
$177,882 to $253,414	29%	$181,440 to $258,482	29%
Over $253,414	33%	Over $258,482	33%

Personal measures at a glance

Personal measures at a glance

Area	What to watch
Tax filing and payments	The T1 filing and balance-due date would move to May 15, and instalment thresholds would increase.
Deductions and credits	Optional flat amounts would simplify claims for relocation, clergy housing, labour mobility, home accessibility, adoption and certain medical expenses.
Families and benefits	The Canada Caregiver Credit would become refundable, while worker and grocery-related benefits would be modified.
Savings and retirement	The temporary RDSP family-member rule would become permanent, and the government will consult on an “RRSP for life.”
Compliance	T1135 thresholds would double, objection deadlines would change, and final tax debts over $50,000 could be reported to credit bureaus.

Personal tax measures

Individuals’ tax return filing and balance-due date

The T1 personal income tax filing deadline and balance-due date would move to May 15 for all individuals, including self-employed individuals and their spouses or common-law partners.

Timing: 2027 and subsequent taxation years.

Instalment thresholds

The annual net-tax-owing threshold that can trigger instalment requirements would increase to $7,500 from $3,000 for individuals resident outside Quebec, and to $4,500 from $1,800 for individuals resident in Quebec. The thresholds would be indexed to inflation and rounded to the nearest $500.

Timing: Taxation years beginning on or after January 1, 2028.

Instalments for individuals with business income

Individuals whose primary income source is business, professional or commission income could make one annual instalment instead of quarterly payments. The payment would equal two-thirds of combined federal-provincial net tax owing and would be due December 31, with the balance due on the applicable balance-due date.

Timing: 2028 and subsequent taxation years.

Optional flat amounts for deductions and credits

The budget proposes simplified alternatives to claiming actual expenses: $1,000 for an eligible relocation; $1,000 per eligible month for the clergy residence deduction, to a $12,000 annual maximum; $1,500 for qualifying labour mobility expenses of tradespeople and apprentices; a one-time $1,000 expense amount for the Home Accessibility Tax Credit; and $1,200 per adopted child for the Adoption Expense Tax Credit. Conditions and existing income or eligibility limits would continue to apply.

Timing: 2027 and subsequent taxation years.

Medical Expense Tax Credit

Prescription requirements would be removed for certain expenses incurred exclusively for medical purposes. Optional flat amounts would also be available: $1,000 for gluten-free food for an individual with celiac disease, $500 for incontinence products, and $2,000 for annual service-dog expenses other than acquisition costs. The service-dog amount could be used for the Medical Expense Tax Credit or Disability Supports Deduction.

Timing: Documentation simplification and the celiac amount apply for 2026 and later years; the incontinence and service-dog amounts apply for 2027 and later years.

Registered Disability Savings Plan

The temporary rule permitting a qualifying family member to open and hold an RDSP for an adult beneficiary would become permanent.

Timing: Permanent continuation after 2026.

T1135 foreign-property reporting

The cost threshold for filing Form T1135 would increase from more than $100,000 to more than $200,000 of specified foreign property. The simplified reporting range would increase from less than $250,000 to less than $500,000.

Timing: As proposed in the budget; implementation details should be confirmed in legislation.

Commission-employee expenses

Commission employees would no longer be prevented from deducting travel and motor-vehicle expenses under the general employee rules merely because they also claim expenses under the commission-employee rules.

Timing: 2027 and subsequent taxation years.

Lump-sum thresholds for periodic benefits

The threshold for paying small periodic benefits as a lump sum would rise to $50 per month for the Canada Child Benefit, $70 per quarter for the Canada Groceries and Essentials Benefit, and, for 2027 only, $70 per payment for the Advance Canada Workers Benefit. The CCB and CGEB thresholds would be indexed annually beginning in July 2028.

Timing: Benefits paid after June 2027.

Advance Canada Workers Benefit

For 2027, advance payments would fall to 25% of the individual’s prior-year Canada Workers Benefit entitlement, from 50%. Advance payments would then be eliminated.

Timing: Reduction for 2027; elimination beginning in 2028.

Build Canada Workers Benefit

The Canada Workers Benefit would be enhanced and renamed the Build Canada Workers Benefit.

Timing: 2027 and subsequent taxation years.

Scholarship, fellowship and bursary income

The scholarship, fellowship and bursary exemption would be available for specified educational programs even where the student receives financial assistance from an arm’s-length person, such as an employer.

Timing: 2027 and subsequent taxation years.

Deductibility of expenses by employed artists

The current deduction cap, generally the lesser of $1,000 and 20% of qualifying artistic employment income, would be replaced with a limit equal to qualifying artistic employment income, reduced by other employment expenses. Unused expenses could be carried forward.

Timing: 2027 and subsequent taxation years.

Registered Retirement Savings Plans consultation

The government will consult on combining core RRSP and RRIF features into an “RRSP for life,” potentially removing the requirement to convert an RRSP to a RRIF at age 71 while retaining minimum withdrawals after age 71. The consultation will also examine successor-holder treatment and direct tax-free transfers on death to qualifying registered vehicles of survivors.

Timing: Submissions requested by January 8, 2027; this is a consultation, not an enacted rule.

Canada Groceries and Essentials Benefit supplement

A one-time supplement, expected in early 2027, would equal half of the maximum annual benefit for 2026-27. Maximum amounts would be $223 per adult, $117 per child and $117 for the single supplement, with special 6% phase-in and 15% phase-out rates.

Timing: Expected in early 2027.

Registered pension plans and individual pension plans

If an RPP registration is revoked after 2026, a 10% tax would apply to plan property and the remaining fair market value would be deemed contributed to a retirement compensation arrangement, generally attracting a 50% tax. The definition of an individual pension plan would expand for certain related-member plans from 2027. Advantage, prohibited-investment and non-qualified-investment rules would extend to IPPs from 2028, and an IPP with assets exceeding 200% of pension liabilities could become revocable.

Timing: Various dates beginning after 2026 through January 1, 2028.

Apprentice vehicle mechanics’ tools deduction

Apprentice vehicle mechanics would be able to deduct all eligible tool expenses under the dedicated apprentice-mechanics deduction instead of splitting claims between two deductions.

Timing: 2027 and subsequent taxation years.

Mineral exploration tax credits

The Mineral Exploration Tax Credit and Critical Mineral Exploration Tax Credit would be extended for five years, covering qualifying flow-through share agreements entered into by March 31, 2032. Antimony would be added as an eligible critical mineral.

Timing: Antimony expansion for agreements entered into after November 5, 2026 and by March 31, 2032.

Canada Caregiver Credit

The Canada Caregiver Credit would become refundable while retaining its existing design, including indexed maximum amounts and income thresholds.

For context, the CCC is a tax credit available to individuals supporting an infirm dependant. For 2027, the maximum claim is $9,001 for certain adult infirm relatives (up to $1,260 of federal tax relief) and $2,812 for an infirm spouse, eligible dependant, or infirm child under 18 (up to $394 of federal tax relief). The credit is generally reduced when the dependant's net income exceeds $21,136, except for infirm children under age 18.

The budget proposes making the CCC refundable starting in 2027, allowing eligible caregivers to receive the full benefit even if they have little or no tax payable, while maintaining the current credit structure, annual indexation, and income threshold rules.

Timing: 2027 and subsequent taxation years.

Northern Residents Residency and Travel Deduction

The residency deduction would no longer be reduced by non-taxable employer-provided benefits or limited to 20% of net income. The travel deduction would no longer be constrained by employer-provided travel benefits or the portion of the $1,200 standard amount allocated to a trip.

Timing: 2027 and subsequent taxation years.

Volunteer Firefighters and Search and Rescue Volunteers Tax Credit

The two existing credits would be combined into one 14% non-refundable credit calculated on $6,000. Eligible hours from both types of service would count toward the combined 200-hour requirement.

Timing: 2027 and subsequent taxation years.

Administrative measures affecting individuals

Notice of objection deadline

For individuals and graduated rate estates, the objection deadline would become the later of one year after the notice of assessment is sent and two years after the filing due date for the taxation year. The existing ability to request a further extension would be eliminated.

Timing: Assessments sent on or after the day that is three months after royal assent.

Disclosure of tax debt to credit bureaus

The CRA could disclose a taxpayer’s debt to credit bureaus where the outstanding amount exceeds $50,000, the related assessments are no longer under objection or appeal, and all objection and appeal rights have expired or been exhausted.

Timing: On royal assent.

Administrative penalties

Most fixed-dollar federal tax penalties would increase to reflect inflation and would be indexed every five years. New penalties would apply to repeated filing or compliance failures after CRA notice, and information-reporting penalties would be strengthened under the Common Reporting Standard, digital-platform reporting and crypto-asset reporting frameworks.

Timing: Generally, for taxation years or fiscal periods ending after 2027; certain reporting-framework changes from 2028.

What individuals and families should do now

• Continue using the current filing, instalment and RRSP/RRIF rules until the relevant proposals are enacted and effective.
• Compare proposed flat deductions with actual documented expenses before choosing the simplified method.
• Review foreign-property cost records and T1135 reporting, particularly for non-registered investment accounts held outside Canada.
• Revisit caregiver, disability, medical, education and northern-resident claims in light of the proposed changes.
• For trusts and IPPs, obtain tax and legal advice before completing a transaction or distribution.
• Track notices of assessment, objection deadlines and final tax debts carefully because extension relief would be removed and credit-bureau disclosure may become possible.

Additional personal and family measures

Private foundations

The excess corporate holdings regime would be eliminated and replaced with rules intended to prevent a private foundation from controlling a corporation.

Timing: January 1, 2027.

Information sharing for pension administrators

The Canada Revenue Agency would be permitted to confirm whether a registered pension plan member is deceased, helping administrators locate beneficiaries and administer death benefits.

Timing: As provided in the implementing legislation.

Corporate and business tax update

Federal Corporate Tax Rates

Federal Corporate Tax Rates

Corporate Income Type	2025	2026
General corporate income	15.00%	15.00%
Small business income	9.00%	9.00%
CCPC* investment income	38.67%	38.67%
Non-CCPC investment income	15.00%	15.00%
Manufacturing & processing income	15.00%	15.00%

*Canadian-controlled private corporation
Based on known rates as of November 5, 2026
Rates represent calendar year rates

Business measures at a glance

Business measures at a glance

Area	What to watch
Business exits and growth	A new Canada Growth Incentive could exempt up to $15 million of qualifying capital gains per eligible individual, per business, subject to narrow eligibility rules.
Reinvestment	The eligible small business corporation rollover would provide longer replacement periods and more flexible active-business tests.
Corporate tax administration	Higher instalment thresholds, streamlined tax elections and proposed loss-transfer rules could reduce compliance friction for some groups.
Capital investment	Clean technology and electricity credits would be extended, while SR&ED eligibility would broaden to certain certification and intellectual-property costs.
Compliance risk	Administrative penalties would rise materially, particularly for medium and large corporations and partnerships, with new consequences for repeated failures.

Business ownership, growth and succession

Canada Growth Incentive capital gains exemption

A new Canada Growth Incentive would permit a Canadian-resident individual to exempt capital gains on qualifying shares of a qualifying corporation, up to a $15 million limit. The limit would apply separately to each qualifying individual for each business. The same shares could not benefit from both this exemption and the Lifetime Capital Gains Exemption. Eligibility is restrictive: excluded businesses include many professional, financial, insurance, real estate, resource, hospitality, arts, recreation, entertainment, licensing and franchising activities. Qualifying shares would also be subject to ownership, asset-use and post-issuance operating tests which are listed below.

A CGI qualifying share must meet four tests:

• The share has to be held by a qualifying individual or member of a qualifying partnership for 36 months immediately before the disposition.
• Throughout the period the qualifying individual or member of a qualifying partnership holds the shares, 50% or more of the fair market value of the corporation’s assets must be attributable to assets used, or reasonably intended to be used, principally in a qualifying business.
• For 24 consecutive months following share issuance, the qualifying business must actively carry on business primarily on Canada.
• At the time of disposition, the corporation must be a Canadian resident private or public corporation listed on a stock exchange located in Canada and all or substantially all of the fair market value of the corporation’s assets must be attributable to assets used principally in a qualifying business.

Timing: Qualifying shares must be issued on or after November 5, 2026 and before 2027. Further anti-multiplication rules are expected.

Eligible small business corporation rollover

The replacement-share rollover would be expanded. An individual could acquire replacement shares during the year of disposition and the following three calendar years, rather than only the following year. Where capital is advanced under a simple agreement for future equity, or SAFE, the deferral could continue for up to five years. The active-business asset test would also be reduced from an “all or substantially all” standard to a “primarily” standard.

Timing: Qualifying dispositions on or after January 1, 2027.

Part VI.1 tax and taxable preferred shares

Canadian-controlled private corporations would be excluded from Part VI.1 tax on dividends they pay on taxable preferred shares. The general dividend allowance would increase from $500,000 to $1.5 million, and the threshold at which the allowance is reduced would increase from $1 million to $3 million.

Timing: CCPC exemption for dividends paid on or after November 5, 2026; allowance changes for taxation years ending after 2026.

Intergenerational farm and fishing property rollover

The rollover for qualifying farm and fishing property would be broadened to include transfers to a niece, nephew, grandniece or grandnephew of the taxpayer or the taxpayer’s spouse or common-law partner.

Timing: Transfers on or after January 1, 2027.

Corporate groups, financing and investment

Proposed corporate non-capital loss transfer rules

The government will consult on an elective system to transfer current-year non-capital losses between a Canadian-resident parent and wholly owned subsidiaries, or between wholly owned sister corporations. The proposed system would be limited to corporations subject to Part I tax and would generally require the transferor and transferee to have permanent establishments in the same province or territory.

Timing: Consultation submissions are requested by January 8, 2027.

Excessive Interest and Financing Expenses Limitation (EIFEL) exceptions

The budget would broaden proposed EIFEL exceptions for financing used for purpose-built rental housing and regulated energy utility activities. Relief could extend to financing used for eligible activities carried on by another affiliated entity or by a partnership in which the borrower and affiliates hold at least a 40% interest.

Timing: For taxation years beginning on or after October 1, 2023.

Clean Electricity and Clean Technology investment tax credits

The availability period for the Clean Electricity and Clean Technology investment tax credits would be extended to eligible property available for use before 2041. The Clean Technology credit would remain at 15% in its final year, now 2040. Eligibility for the Clean Electricity credit would also expand to certain high-voltage intra-provincial transmission property acquired on or after Budget Day.

Timing: Extended availability through 2040; transmission-property expansion for acquisitions on or after November 5, 2026.

Helium exploration and development

Helium exploration and development costs would qualify as Canadian exploration expense and Canadian development expense, while property acquisition costs would qualify as Canadian oil and gas property expense. The proposed Productivity Mega Deduction would increase the deduction rate for Canadian development expense to 100%.

Timing: Expenses incurred on or after November 5, 2026.

Innovation and sector-specific incentives

Scientific Research and Experimental Development

SR&ED-eligible activities would be expanded to include certain regulatory certification work, such as testing, technological validation and studies, as well as activities to establish and maintain intellectual-property protection.

Timing: Taxation years beginning on or after November 5, 2026.

Mineral exploration tax credits

The Mineral Exploration Tax Credit and Critical Mineral Exploration Tax Credit would be extended for five years, so qualifying flow-through share agreements entered into by March 31, 2032 could qualify. Antimony would be added as an eligible critical mineral.

Timing: Antimony expansion for eligible agreements entered into after November 5, 2026 and by March 31, 2032.

Canadian Journalism Labour Tax Credit

The credit would extend to qualifying audio and audiovisual news production. The 35% credit rate and annual labour expenditure limit of $85,000 per eligible newsroom employee would apply, and the 35% rate would be extended through 2028.

Timing: Qualifying labour expenses incurred on or after November 5, 2026.

Transactions involving non-residents

Taxable Canadian property withholding

For corporate vendors, the purchaser withholding rate on taxable Canadian property other than specified property would fall from 25% to 15% of the purchase price, and the remittance rate for a clearance certificate would fall from 25% to 15% of the capital gain. For specified taxable Canadian property, purchaser withholding would fall from 50% to 30%.

Timing: Dispositions on or after January 1, 2027.

Section 85 rollovers of taxable Canadian property

Fully tax-deferred section 85 rollovers involving taxable Canadian property would be exempt from withholding and remittance requirements if the election form is filed within 30 days and the purchaser provides the required notice to the Canada Revenue Agency. Anti-avoidance rules would also be strengthened by extending the relevant period from three to five years and broadening the subsequent-property test.

Timing: Dispositions on or after January 1, 2027.

Trust distributions to non-residents

The trust rollover denial rules would be broadened to cover indirect distributions of trust property to non-residents, including distributions to a corporation or partnership with a direct or indirect non-resident shareholder or partner.

Timing: Distributions on or after November 5, 2026.

Indirect tax and regulated industries

Federal fuel excise tax licensing

Wholesaler-license eligibility would expand to certain fuel resellers. Licensed manufacturers could also import or purchase fuel without triggering excise tax where the fuel is intended for resale. A time-limited relief payment is proposed for certain historical cases of duplicated tax.

Timing: Resale relief for licensed manufacturers proposed from November 6, 2026; other changes generally after royal assent.

GST/HST health measures

Qualifying massage therapy services would become exempt from GST/HST, and certain alternating electric field therapy devices used in cancer care would become zero-rated. Certain large financial institutions could seek pre-approval of GST/HST input allocation methods for three fiscal years rather than one.

Timing: Health measures apply to qualifying supplies after November 5, 2026.

Cannabis and spirits excise rules

A common cannabis excise stamp would be introduced for participating jurisdictions with the same duty rate, together with related compliance and penalty changes. Certain excise warehouse licensees holding non-duty-paid packaged spirits would have to post security based on monthly liabilities, subject to a $5,000 minimum and $2 million maximum per license.

Timing: Generally on royal assent.

Tax administration and compliance

Corporate instalment threshold

The federal instalment threshold for corporations would increase from $3,000 to $7,500 and would be indexed to inflation, rounded to the nearest $500. For individuals resident in Quebec, the threshold would increase from $1,800 to $4,500.

Timing: Taxation years beginning on or after January 1, 2028.

Simplified tax elections

Corporations would no longer need to file a certified copy of a corporate resolution or authorization for certain elections and agreements, including capital dividend elections, specified transfers of tax liability, transfers of qualified SR&ED expenditures and allocations of SR&ED employee wages.

Timing: Elections and agreements made on or after royal assent.

Disclosure of tax debt to credit bureaus

The CRA would be permitted to disclose certain tax debts to credit bureaus where the outstanding debt exceeds $50,000, the relevant assessments are not under objection or appeal, and objection and appeal rights have expired or been exhausted. Similar amendments would apply under the Excise Tax Act.

Timing: On royal assent.

Higher administrative penalties

Most fixed-dollar penalties would rise to reflect inflation and would be indexed every five years. Certain penalties for medium corporations and partnerships would equal three times the base amount, while those for large entities would equal eight times the base amount. New penalties would apply to repeated failures after notice from the CRA. Information-reporting penalties would also be strengthened under the Common Reporting Standard, digital-platform reporting and crypto-asset reporting frameworks.

Timing: Generally for taxation years or fiscal periods ending after 2027; certain information-reporting changes from 2028.

What business owners should do now

• Review planned share issuances, financings and exits for possible Canada Growth Incentive eligibility, especially given the proposed short issuance window and excluded sectors.
• Revisit succession and estate-freeze structures, including preferred shares, farm or fishing property and transactions involving non-residents.
• Update capital-investment models for clean technology, electricity, SR&ED, mining and sector-specific incentives.
• Identify elections, objections, information returns and recurring compliance obligations that could be affected by the administrative changes and higher penalties.
• Monitor draft legislation and obtain tax and legal advice before implementing a transaction based on a budget proposal.

Refer to the official Budget 2026 document for further details on the above tax announcements.

Important: This has been prepared by the Total Wealth Solutions Group of Raymond James Ltd., (RJL). Statistics and factual data and other information are from sources RJL believes to be reliable but their accuracy cannot be guaranteed. It is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities nor is it meant to replace legal, accounting, taxation or other professional advice. We are not tax advisors and we recommend that clients seek independent advice from a professional advisor on tax-related matters. The information is furnished on the basis and understanding that RJL is to be under no liability whatsoever in respect thereof. This is intended for distribution only in those jurisdictions where RJL and the author are registered. Securities-related products and services are offered through Raymond James Ltd., Member - Canadian Investor Protection Fund. Insurance products and services are offered through Raymond James Financial Planning Ltd., which is not a Member - Canadian Investor Protection Fund.