François-Philippe Champagne, Minister of Finance and National Revenue announced the 2026 federal budget on 5 November 2026.

2026 Federal Budget^©

On 5 November 2026, François-Philippe Champagne, Minister of Finance and National Revenue announced the second federal budget (hereinafter known as the Budget) of the Carney's Liberal government. While general personal and corporate tax rates remain unchanged, the Budget focused on reducing tax compliance burdens and expanding capital incentives. The following are not an exhaustive list of changes proposed by the Budget but some highlights we consider significant.

1. The Budget introduced a new $15 million Capital Gains Exemption for qualifying shares of eligible Canadian corporations. To qualify, businesses must be an eligible Canadian-resident corporation (a Canadian controlled private corporation or a public corporation on a designated Canadian exchange). At the time immediately before and after the issuance of the shares, the combined carrying value of the issuing private corporation's and all related corporations' assets must not exceed $100 million. Shares sold must generally be held for at least 36 months. All of the corporation's assets must be used substantially in an active business carried on in Canada. It applies to individuals 18 years or older (corporations and trusts are not eligibile) holding shares issued on or after 5 November 2026 and resident in Canada throughout the year when the exemption is claimed.

   Businesses such as professional practices (accounting, legal, medical, engineering), consulting, financial services, real estate, natural resources, framing/licensing, and hospitality are excluded. Gains exempted under the Canada Growth Incentive are subject to a 30% inclusion rate for Alternative Minimum Tax purposes, matching the existing Lifetime Capital Gains Exemption (LCGE) mechanism.

2. Budget allows the immediate 100% write-off for Canadian Development Expenses (CDE) incurred on or after 5 November 2026. CDE are a specific category of tax-deductible costs under the Canadian Income Tax Act for the mining, oil, and gas industries. They apply to expenses incurred during the development phase of a resource property after a mineral deposit or well has been found to be commercially viable, or after a mine has entered commercial production.

   Depreciable property eligible for immediate expensing would include all capital property that is subject to the CCA rules acquired on or after September 15, 2026, except buildings (and additions to buildings) included in CCA classes 1 and 3; property included in CCA classes 14 and 14.1 (e.g., franchises, licenses and goodwill), and class 51 (e.g., regulated natural gas distribution pipelines); certain vehicles in classes 10 and 10.1; and property depreciated under Schedule V and VI of the Income Tax Regulations.

3. Starting in the 2027 taxation year, the T1 and Form T1135 tax (foreign property reporting) returns filing deadline and balance-due date for all individuals, including self-employed taxpayers and spouses, will be extended from 30 April to to 15 May. For self-employed individuals and their spouses or common-law partners, the tax filing deadline would be shortened by a month, from the prior June 15 deadline to May 15. These amendments would apply starting in 2027. Consequently, interest on unpaid balance-due amounts and late-filing penalties under the Income Tax Act 162(1) now begin accruing on 16 May.
4. The threshold for individuals and corporations to file quarterly tax instalment will be increased from $3,000 to $7,500 for tax years 2028 and later. Self-employed individuals gain the option to make a single annual instalment (2/3 due December 31).
5. For taxation years or fiscal periods that end after 2026, the foreign property reporting threshold doubles from $100,000 to $200,000 at cost, the threshold for simplified reporting from $250,000 to $500,000.
6. The Budget introduced no-receipt flat deductions for moving expenses ($1,000), Home Accessibility Tax Credit ($1,000), and specific medical expenses.
7. The Budget introduces a one-time 50% supplement to the Canada Groceries and Essentials Benefit (CGEB, previously the GST/HST credit). The total supplement payment amounts are up to $339 for a single individual without children and up to $679 for a couple with two children.
8. The Budget rebrands the Canada Workers Benefit into the Build Canada Workers Benefit (BCWB) to expand financial support for low- and modest-income workers starting in the 2027 taxation year. The minimum earnings requirement to qualify is lowered from $3,000 to $500 per year (and from $1,150 down to $200 for the disability supplement). The maximum BCWS for single individuals without children rises from $1,709 to $1,859 and for families from $2,943 to $3,143.
9. Previously a non-refundable tax credit, the Canada Caregiver Credit will become fully refundable up to $1,260 annually in 2027 tax year and indexed to inflation thereafter.
10. The Budget proposes to extend the 90-day deadline to file an object per Income Tax Act subsection 165(1) to one-year and remove the possibility of an extension.

Remarks

The new $15 million Capital Gains Exemption for qualifying shares of eligible Canadian corporations is an enticing incentive. However, mutual funds and ETFs comprised of qualifying shares are not eligible for the Canada Growth Incentive capital gains exemption. Investors should exercise caution and discretion when investing and claiming this exemption in due course.

The 100% write-off for Canadian Development Expenses is restrictive and only applies to certain classes of capital assets for certain industries. Taxpayers should plan their capital asset purchases carefully and write off the capital cost allowance allowed by law.

There is no explanation of why the thresholds of foreign asset reporting are selected. Be mindful that taxable income generated by foreign asssets must be included in tax returns despite whether these assets are required to be reported in T1135 or not.

It is noteworthy to remark that the Federal Government is considering adding a "successor holder" feature to RRSPs for spouses or common-law partners. Currently, a successor holder is only available for a TFSA, not RRSP. This could allow an RRSP to remain open until the death of the successor holder and avoid the value of the RRSP property being included in the income of the deceased holder. Adding successor holder to RRSPs would make this provision at par with TFSAs. The Federal Government is also considering replacing the current indirect "rollover" provisions that apply on the death of an RRSP holder with rules permitting direct tax-free transfers to qualifying registered vehicles of qualifying survivors.

The Budget proposes the additional funding to the CRA to investigate tax evasion and work with law enforcement authorities to combat money laundering ($182.4 million over four years) and to expand compliance activities related to individuals and businesses that do not file income tax returns ($116.5 million over four years). The Department of Finance predicts these measures will generate approximately $1.2 billion in additional revenue over four years. Taxpayers would expect more frequent CRA inquires.

Since the Carney's Liberal Party holds a majority government in the House of Commons, the Budget is expected to become law in due course.

[This page was added on 6 November 2026, last revised 6 November 2026.]