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    • Federal Budget 2026: Proposed Tax Changes

    Here is a summary of the Personal and Business Tax Measures included in the Federal Budget 2026.

    PERSONAL TAX MEASURES:

    • 2027 Canada Groceries and Essentials Benefit (CGEB) Supplement
      • Budget 2026 proposes to deliver a one-time CGEB supplement to be delivered in early 2026, equal to half the maximum annual CGEB amounts for 2026-2027 benefit year: $223 per adult, $117 per child and $117 for the single supplement.
    • Mineral Exploration Tax Credit (METC) and Critical Mineral Exploration Tax Credit (CMETC)
      • Budget 2026 proposes to extend eligibility for the METC and CMETC for five years, to flow-through share agreements entered into on or before March 31, 2023.
      • Budget 2026 also proposes to expand the CMETC to include antimony as an eligible critical mineral and would apply to expenditures renounced under eligible flow-through share agreements entered into after Budget Day and on or before March 31, 2023.
    • Canada Caregiver Credit (CCC)
      • Budget 2026 proposes to make the CCC refundable to ensure that eligible caregivers can receive the full amount even if they have little or no tax liability.  This would apply to 2027 and subsequent years.
    • Canada Growth Incentive – Capital Gains Exemption
      • Budget 2026 proposes to introduce a new Canada Growth Incentive capital gains exemption to allow a Canadian resident individual to claim a tax exemption on capital gains realized on the disposition of qualifying shares of a qualifying corporation, up to a $15 million limit.  This $15 million will apply separately to each qualifying individual in respect of each business.
    • Canada Growth Incentive – Rollover for Investments in Small Businesses
      • Period to acquire replacement shares: Budget 2026 proposes to increase the period to acquire replacement shares and to introduce a special provision for individuals who have entered into agreements for future equity.
      • Active business requirement: Budget 2026 also proposes to lower the threshold from “all or substantially all” to “primarily” for the active business requirement’s asset test that must be met throughout the period during which the individual owned the shares. However, the “all or substantially all” threshold will nee dot be met at the time of issuance and disposition of shares.These measures will apply to qualifying dispositions that occur on or after January 1, 2027.Increasing the Instalment Thresholds: Budget 2026 proposes to increase the threshold form $3,000 to $7,500 for corporations and individuals resident outside Quebec, and from $1,800 to $4,500 for individuals resident in Quebec.  This measure will apply to taxations years after January 1, 2028.
      • Allowing an Annual Instalment for All Individuals with Business Income:  Budget 2026 proposes that individuals whose primary source of income is from a business be allowed to make single annual instalment payment, instead of quarterly instalments.  The single instalment payment will equal two thirds of their combined federal-provincial net tax owing for the year and be due by December 31. This will apply to 2028 and subsequent years.
    • Income Tax Return Filing and Balance-Due Dates for Individuals
      • Budget 2026 proposes to change the T1 filing and balance-due dates to May 15 for all individuals including self-employed individuals and their spouses or common-law partners. This measure will apply to 2027 and subsequent tax years.
    • Northern Residents Deductions
      • Residency Deduction: The residency deduction is generally based on the number of days that an individual resides in a prescribed zone, subject to 2 rules that reduce the value of the deduction in certain situations: the amount of residency deduction is reduced by the amount of non-taxable employer-provided benefits and it cannot exceed 20% of the individual’s net income. Budget 2026 proposes to eliminate both these restrictions.
      • Travel Deduction: Budget 2026 proposes to eliminate the limit where the deduction amount can be deducted in respect of a given trip is the least of either the total amount of employer-provided travel benefits received in respect of the trip or the portion of a $1,200 “standard amount” allocated to the trip.
      • These measures will apply to 2027 and subsequent tax years.
    •  Expansion of the Intergenerational Farm and Fishing Property Rollover
      • Budget 2026 proposes to expand the rollover so that it is available for transfers to a niece, nephew, grandniece, or grandnephew of the taxpayer or the taxpayer’s spouse or common-law partner.
      • This measure would apply for transfers that occur on or after January 1, 2027.
    • Registered Disability Savings Plan
      • Budget 2026 proposes to make the qualifying family member measure permanent. The current temporary measure that allows a qualifying member of the individual to open an RDSP and be the plan holder is in place up to the end of 2026. The qualifying member can be a parent, spouse or sibling.
    • Optional Flat Amounts for Personal Income Tax Deductions and Credit
      • To reduce the need for individuals to keep receipts to support their amounts claimed, Budget 2026 proposes optional flat-amount calculation methods for certain deductions and credits. Note that individuals would still need to establish their eligibility.
        1. These measures will apply to the 2027 and subsequent tax years.
    • Moving Expense Deduction
      • Budget 2026 proposes to allow individuals making an eligible relocation to deduct a flat $1,000 in respect of the relocation instead of tracking and claiming their deductible moving expenses.
      • The amount deducted will still be limited to the individual’s employment or self-employment income earned at the new location, or to the student’s taxable income from scholarships, bursaries and research grants.
    • Clergy Residence Deduction
      • Budget 2026 proposes to allow eligible individuals to deduct a flat amount in a year of $1,000 for each month in which they are eligible for the deduction, up to a maximum of $12,000 for a year, instead of claiming according to the existing detailed method.
      • The amount deducted would still be limited to the individual’s remuneration for the year from their office or employment.
    • Labour Mobility Deduction for Tradespeople
      • Budget 2026 proposes to allow eligible tradespeople and apprentices working in the construction industry who undertake an eligible temporary relocation to deduct a flat $1,500 per year instead of claiming actual eligible expenses incurred.
    • Home Accessibility Tax Credit
      • Budget 2026 proposes to allow eligible individuals who incur qualifying expenses to calculate the Home Accessibility Tax Credit using a one-time optional flat-expense amount of $1,000 for a year instead of claiming their actual expenses incurred.
    • Adoption Expense Tax Credit
      • Budget 2026 proposes to allow eligible adoptive parents to calculate the Adoption Expense Tax Credit using an optional flat expense amount of $1,200 per adopted child in the year an adoption is completed, instead of their actual eligible adoption expenses.
    • Foreign Income Verification Statement – Form T1135
      • Budget 2026 proposes to increase the threshold which Form T1135 must be filed from $100,000 to $200,000. The Canada Revenue Agency would also increase the threshold for simplified reporting from less than $250,000 to less than $500,000.
    • Apprentice Vehicle Mechanics’ Tools Deduction
      • Budget 2026 proposes to allow apprentice vehicle mechanics to deduct all eligible expenses under the apprentice vehicle mechanics’ tools deduction.
    • Medical Expense Tax Credit and Disability Supports Deduction
      • Documentation Requirements for Certain Eligible Expenses: Budget 2026 proposes to simplify the METC while maintaining the integrity of the credit by reducing the documentation requirements for certain eligible expenses. This measure would apply to the 2026 and subsequent taxation years.
      • Flat-Amount Method: Budget 2026 proposes to allow individuals to claim an optional flat amount in respect of the following categories of expenses. 
        • Gluten-free Food Expenses : Budget 2026 proposes to allow an METC claim in respect of an individual with celiac disease based on an optional flat amount of $1,000 for incremental gluten-free food expenses incurred over a particular year. This measure would apply to the 2026 and subsequent taxation years.
        • Incontinence Product Expenses: Budget 2026 proposes to allow an METC claim based on an optional flat amount of $500 in respect of Incontinence Product expenses incurred over a particular year. This measure would apply to the 2027 and subsequent taxation years.
        • Service Dog Expenses: Budget 2026 proposes to allow an METC or DSD claim based on an optional flat amount of $2,000 for expenses that are incurred in relation to a service dog over a particular year.  This measure would apply to the 2027 and subsequent taxation years.
    • Deductibility of Expenses Against Commission Income
      • Budget 2026 proposes to eliminate the rules that prevent commission employees from deducting travel and motor vehicle expenses under the general employee provisions when they also claim expenses under the commission-employee rules.
      • This measure would apply to the 2027 and subsequent taxation years.
    • Lump-sum Thresholds for Periodic Payment of Benefits
      • Budget 2026 proposes to increase the lump-sum payment threshold to $50 per month for the Canada Child Benefit, to $70 per quarter for the Canada Groceries and Essentials Benefit and, for the 2027 taxation year only, to $70 per payment for the Advance Canada Workers Benefit.
      • This measure would apply to benefits paid after June 2027.
    • Scholarship, Fellowship, and Bursary Income
      1. Budget 2026 proposes to allow a program to qualify even where a student received financial assistance from an arm’s-length person.
      1. This measure would apply to the 2027 and subsequent taxation years.
    • Deductibility of Expenses by Employed Artists
      • Budget 2026 proposes to replace the existing cap on the deduction with a limit equal to the amount of the artist’s employment income for the year from the specified artistic activities.
      • This measure would apply to the 2027 and subsequent taxation years.
    • Volunteer Firefighters and Search and Rescue Volunteers Tax Credit
      • Budget 2026 proposes to combine the Volunteer Firefighters Tax Credit and the Search and Rescue Volunteers Tax Credit into a single 14-per-cent non-refundable Volunteer Firefighters and Search and Rescue Volunteers Tax Credit calculated on an amount of $6,000.
      • Eligible volunteer firefighter and search and rescue services would both count towards the 200-hour requirement for the combined credit.
      • This measure would apply to the 2027 and subsequent taxation years.
    • Registered Retirement Savings Plan
      • Budget 2026 announces the government’s intention to merge the core features of the RRSP and RRIF under the Income Tax Act into a single “RRSP for life” and to make other changes to improve and modernize the RRSP tax rules.
      • This would eliminate the need for individuals to convert their RRSP to a RRIF at age 71. Individuals over the age of 71 would continue to be required to make minimum withdrawals.
    • Excess Corporate Holdings Regime for Private Foundations
      • Budget 2026 proposes to eliminate the excess corporate holdings regime. Instead, the rules that currently prohibit public foundations from acquiring control of a corporation would be extended to private foundations.
      • This measure would apply to taxation years that begin on or after January 1, 2027.
    • Objections to Assessments
      • Budget 2026 proposes, for most taxpayers, to amend the deadline to file a notice of objection to an income tax assessment to one year after the day the notice of assessment is sent.
      • For individuals and graduated rate estates, Budget 2026 proposes to amend the deadline to the later of one year after the notice of assessment is sent and two years from the tax return filing due date for the taxation year being assessed.Consequently, taxpayers would no longer need to apply for an extension of time and the ability to do so would be eliminated.
      • This amendment would apply to assessments sent on or after the day that is three months after royal assent.
    • Disclosure of Tax Debt to Credit Bureaus
      • Budget 2026 proposes to amend the Income Tax Act to allow the CRA to disclose information about a taxpayer’s tax debts to credit bureaus to support the collection of outstanding tax debts and more accurate assessments of credit risk.
    • Trust Distributions to Non-Residents
      • Budget 2026 proposes to broaden the current rollout denial rule to include indirect distributions of trust property to non-resident beneficiaries.
      • The rollout would be denied for any property that is transferred to a corporation (or partnership) that has a direct or indirect non-resident shareholder (or partner).
      • This measure would apply in respect of distributions of property that occur on or after Budget Day.
    • Information Sharing – Pension Administrators
      • Budget 2026 proposes to amend the Income Tax Act to permit the CRA to confirm to the administrator of a registered pension plan that a plan member is deceased.
    • Registered Pension Plans
      • Revocation of a Registered Pension Plan: Budget 2026 proposes to provide express tax consequences under the Income Tax Act and Income Tax Regulations where the CRA revokes the registration of an RPP. These measures would apply to revocations of RPPs after 2026. 
      • Individual Pension Plans: Budget 2026 proposes to expand the IPP definition to include defined benefit RPPs under which all members are either related to a participating employer or do not deal at arm’s length with any member related to a participating employer. This measure would apply as of January 1, 2027.Non-qualified Investments: Budget 2026 proposes to subject IPPs to the same advantage rules, non-qualified investment rules, and prohibited investment rules that currently apply to other registered plans of controlling individuals. This measure would apply as of January 1, 2028. Transitional rules would apply to investments acquired before 2028 that become non-qualified or prohibited on January 1, 2028.
      • Excessive Surplus: Budget 2026 proposes to impose a new condition that an IPP must satisfy to maintain its RPP registration. If the value of an IPP’s assets exceeds 200 per cent of its pension liabilities, the plan would become a “revocable plan” for RPP registration purposes. The CRA is required to issue a notice of intent to revoke at least 30 days prior to issuing a revocation letter. This measure would apply as of January 1, 2028.
    • Build Canada Workers Benefit
      • Budget 2026 proposes to phase out the Advance Canada Workers Benefit, reinvest a portion of the resulting savings to enhance the Canada Workers Benefit and rename the enhanced benefit the Build Canada Workers Benefit.
      • Budget 2026 proposes to enhance the benefit and rename it the Build Canada Workers Benefit (BCWB). For the 2027 taxation year, the enhanced benefit would:
        • reduce the phase-in threshold to $500;
        • increase the maximum benefit amounts to $1,859 for single individuals without children and to $3,143 for families; and
        • adjust the phase-out thresholds to $27,104 for single individuals without children and to $30,731 for families, so that the higher maximum benefits do not change the income levels at which the entitlement is fully phased out.

    BUSINESS TAX MEASURES:

    • Clean Electricity and Clean Technology Investment Tax Credits
      • Extension to 2040: Budget 2026 proposes to extend the Clean Electricity and Clean Technology investment tax credits to eligible property that becomes available for use before 2041.
      • High-Voltage Intra-Provincial Electricity Transmission: Budget 2026 proposes to expand eligibility for the Clean Electricity investment tax credit to include intra-provincial electricity transmission property built to operate at or above the highest voltage currently used for transmission lines in each province, and at or above 69 kilovolts in the territories. This measure would apply with respect to property that is acquired on or after Budget Day.
      • Scientific Research and Experimental Development Tax Incentive Program: Budget 2026 proposes to expand the activities and expenditures eligible under the SR&ED program.
      • Regulatory and Certification Requirements: The expanded scope of eligible activities would include tests, technological validations, and studies conducted to meet regulatory requirements for obtaining the initial approval or certification necessary to commercialize a product or process. To be eligible, these activities would need to directly relate to a project that is eligible under the SR&ED program’s existing rules.
      • Intellectual Property Protection: Eligible expenditures would be expanded to include costs related to the registration and maintenance of intellectual property (IP) protection in respect of IP developed in the course of conducting a project that is eligible under the existing scope of activities under the SR&ED program. This measure would apply to taxation years that begin on or after Budget Day.
      • Interest Deductibility Limits:  Budget 2024 announced an exception to the EIFEL rules for interest and financing expenses incurred before 2036 by a taxpayer on borrowings used by the taxpayer to acquire or build purpose-built rental housing in Canada, or convert a property into such housing.
      • Indirect Borrowings: Budget 2026 proposes to expand the two EIFEL exceptions to cover a borrower’s interest and financing expenses where the borrowed funds are used for eligible activities carried on by another corporation, trust or partnership within the same group of affiliated entities.
      • Regulated Energy Utility Business: Budget 2026 also proposes to expand and clarify the definition of a regulated energy utility business in Canada to cover cases where the prices of all or substantially all of the products or services of the business are:
        • government-established, approved or guaranteed (including sales to Crown corporations); or
        • established through a government-operated market that facilitates delivery for consumption or use in Canada.
    • Canadian Journalism Labour Tax Credit (CJLTC)
      • Extension to Audio and Audiovisual News: Budget 2026 proposes to extend eligibility for the CJLTC to the production of audio and audiovisual news. Audio and audiovisual news organizations that qualify as a QCJO and meet existing CJLTC-specific Canadian ownership requirements would be eligible to claim the tax credit in respect of the salary or wages of an eligible newsroom employee.
      • Extension of the Enhanced Credit Rate: The CJLTC rate was temporarily increased from 25 per cent to 35 per cent from January 1, 2023 to December 31, 2026. The rate is currently scheduled to return to 25 per cent on January 1, 2027. Budget 2026 proposes to extend the 35-per-cent rate until December 31, 2028.
    • Taxable Preferred Shares
      • Budget 2026 proposes to introduce the following measures:
        • Exempt Canadian-controlled private corporations from the taxable preferred share regime by excluding dividends they pay from Part VI.1 tax. This measure would apply to dividends paid on or after Budget Day.
        • Increase the dividend allowance from $500,000 to $1,500,000 and the threshold for the reduction of the dividend allowance from $1,000,000 to $3,000,000. This measure would apply to taxation years that end after 2026.
    • Helium Exploration, Development and Resource Expenses
      • Budget 2026 proposes to allow helium exploration and development expenses to qualify as CEE and CDE, consistent with the treatment of similar expenses in the petroleum and natural gas sector. Expenses incurred to acquire helium resource properties would qualify as COGPE. This measure would apply to expenses incurred on or after Budget Day.
    • Corporate Tax Elections
      • Budget 2026 proposes to eliminate the existing requirements for corporations to file a certified copy of a resolution or authorization when making certain elections or agreements. This measure would apply to elections and agreements made on or after the date of royal assent of the enacting legislation.
    • Corporate Loss Transfers
      • Budget 2026 invites stakeholders to comment on the introduction of a corporate loss transfer rule.
      • Qualifying Corporate Group: Loss transfers would be permitted in the following cases:
        • between a parent corporation and a subsidiary corporation that is wholly owned, directly or indirectly, by the parent corporation; and
        • between two subsidiary corporations that are wholly owned, directly or indirectly, by the same parent corporation.
      • Eligible Corporations: The rule would apply only to corporations resident in Canada that are subject to tax under Part I of the Income Tax Act. However, certain types of corporations that are considered conduits for their shareholders or members (e.g., mutual fund corporations) would not be able to transfer or receive losses.
      • Eligible Losses and Annual Joint Election: The rule would permit current-year non-capital losses to be transferred. A corporation could elect to transfer all or part of its current-year non-capital loss.
      • Provincial Allocation: The corporate loss transfer rule could affect provincial and territorial tax bases if a loss arising in one jurisdiction were used to reduce taxable income allocated to another jurisdiction. As such, a loss arising in a province or territory could only be transferred to offset income arising in that same jurisdiction.
      • Tax Integrity: Allowing corporate loss transfers may give rise to tax integrity concerns. The purpose of a loss transfer rule would be to provide a more efficient mechanism by which income of a corporate group could be offset by non-capital losses of the group. However, applying a loss transfer mechanism to a group of corporate entities, each of which is taxed on a stand-alone basis, may result in other unintended tax benefits. The government invites views on how the loss transfer mechanism should address tax integrity concerns.
    • Administrative Penalties
      • Budget 2026 proposes several amendments to administrative penalties under federal tax statutes.
      • Inflation Adjustment of Fixed-Dollar Administrative Penalties: Budget 2026 proposes to increase most fixed-dollar penalties to broadly account for inflation since their enactment, so that they remain meaningful and proportionate.
      • Medium and Large Corporations and Partnerships: Budget 2026 proposes to calibrate certain penalty amounts by taxpayer size. These would apply to penalties for failing to provide required information on a form, failing to file certain tax forms, and failing to comply with certain other obligations under the Income Tax Act.
      • Repeated Failures: Budget 2026 proposes new penalties that would apply to repeated failures to file tax forms and repeated failures to comply with obligations that do not have a more specific penalty. These penalties would generally double the base penalty that applies in respect of the first failure.
      • Common Reporting Standard and Other Frameworks: Budget 2026 proposes to strengthen the penalties applicable under these information reporting regimes by amending the Income Tax Act to ensure that a penalty would apply for failing to comply with a duty or obligation imposed under these regimes.
    • Technical Income Tax Act Amendments
      • Budget 2026 also proposes to make a number of technical amendments to maintain the integrity of the penalty regime in the Income Tax Act.
    • Other Tax Statutes
      • Changes are also proposed to certain penalties under the Goods and Services Tax/Harmonized Sales Tax (GST/HST) provisions of the Excise Tax Act, the Excise Act, 2001, the Air Travellers Security Charge Act, the Select Luxury Items Tax Act and to align them with inflation adjustments proposed under the Income Tax Act. Specifically, Budget 2026 proposes to increase most fixed-dollar administrative penalties under these statutes and index them to inflation once every five years in line with proposed income tax penalties.
      • These Income Tax Act measures would apply to taxation years or fiscal periods ending after 2027. 

    Source: https://budget.canada.ca/2026/home-accueil-en.html

    (Image used with permission from Prezi Inc.)