Federal Budget: 2026 What You Need to Know
The federal government released Budget 2026 on November 5, 2026. While there were no changes announced to general personal or corporate income tax rates, the Budget contains several significant proposals for individuals and businesses.
Expanded Immediate Expensing for Businesses
Of particular interest to business owners is the government’s Productivity Mega Deduction, which would significantly expand immediate expensing for capital investments.
Although confirmed in Budget 2026, this measure was originally announced by the federal government on September 15, 2026. The Budget confirms the government’s intention to proceed with the previously released proposals.
Immediate expensing allows a business to deduct the full cost of qualifying capital property in the year it becomes available for use, rather than deducting the cost over several years through regular capital cost allowance.
The government indicates that the expanded rules would increase the proportion of capital investment eligible for immediate expensing from approximately 15% to more than 65%. Qualifying investments can include various types of computer equipment, software, vehicles and aircraft, fibre-optic cable, greenhouses, patents and certain infrastructure, resource and other capital assets.
More details available on the Department of Finance Canada release here.
This could represent a significant tax-planning opportunity for businesses contemplating capital expenditures.
Other Budget Highlights
Budget 2026 also proposes:
- A new capital gains exemption of up to $15 million per individual, per qualifying business under the Canada Growth Incentive, subject to significant conditions and industry exclusions.
- Increasing the tax instalment threshold from $3,000 to $7,500 for most individuals and corporations.
- Increasing the T1135 foreign-property reporting threshold from $100,000 to $200,000.
- Expanding eligible expenditures under the SR&ED tax incentive program.
- Moving the personal income tax filing and payment deadline to May 15, beginning with the 2027 taxation year.
- Consultation on a new corporate loss-transfer regime for certain related corporations.
- Potential CRA disclosure of certain outstanding tax debts exceeding $50,000 to credit bureaus, subject to prescribed safeguards.
Read the full commentary here.
If you would like to discuss how any of these proposals may affect you or your business, please contact our office. at 905-891-5339.
