Federal Budget 2026 leaves personal and corporate tax rates unchanged, but it brings a long list of changes that will affect how British Columbians file, save, invest and run their businesses. Finance Minister François-Philippe Champagne tabled the budget on November 5, 2026.

The headline numbers: a projected deficit of $62.3 billion for 2026–27 and $62.5 billion for 2027–28. The $500,000 small business limit for Canadian-controlled private corporations (CCPCs) stays in place, and the federal small business rate remains 9%.

Below, we summarize the measures most relevant to our clients. Keep in mind that these are proposals. Most still need legislation before they become law, and details can change along the way.

For Business Owners

A new $15 million capital gains exemption for founders and early investors

The biggest new measure is the Canada growth incentive (CGI). It lets a Canadian-resident individual shelter up to $15 million of capital gains on qualifying shares of a qualifying corporation, per individual, per business.

Exempt gains are still partly included (30%) for alternative minimum tax. Claiming the CGI also limits your lifetime capital gains exemption on shares of the same company.

More time to roll over gains into small business investments

From 1 January 2027, if you sell eligible small business corporation shares, you will have until the end of the third year after the year of sale to reinvest and defer the gain. That window can stretch to five years if you sign an agreement for future share issuance. The active business asset test during the holding period also eases from “all or substantially all” to “primarily.”

Immediate expensing on a broader range of assets

The budget confirms the previously announced productivity mega deduction. It permanently extends immediate expensing to a wider range of capital property acquired after 14 September 2026. If you are planning equipment or other capital purchases, timing may now matter.

SR&ED covers more costs

For taxation years beginning after 4 November 2026, SR&ED will also cover regulatory testing needed to commercialize a product, and the costs of registering and maintaining patents and other IP developed through eligible projects.

Other business changes

• Taxable preferred shares: Dividends paid by CCPCs on or after 5 November 2026 will be exempt from Part VI.1 tax.
• Less paperwork for elections: Corporations will no longer need to file a certified copy of a directors’ resolution for elections such as the capital dividend election, once the legislation receives Royal Assent.
• Corporate loss transfers: The government is consulting on allowing current-year non-capital losses to move between a parent and wholly owned subsidiaries in the same province. Comments are due 8 January 2027.
• Instalments: The threshold for corporate tax instalments rises from $3,000 to $7,500 for taxation years beginning on or after 1 January 2028.

For Individuals and Families

Federal tax brackets are unchanged and will continue to be indexed to inflation. Several changes aim to simplify filing and reduce record-keeping.

A new filing deadline: 15 May

Starting with the 2027 tax year (returns filed in 2028), the filing and balance-due date for personal returns moves to 15 May for everyone, including the self-employed. Today, most individuals must file and pay by 30 April, and self-employed individuals have until 15 June to file.

Credits and deductions

• Canada caregiver credit becomes refundable from 2027, so lower-income caregivers can benefit even if they owe no tax.
• Optional flat amounts instead of receipts from 2027, for example $1,000 for moving expenses, $1,500 for the labour mobility deduction for tradespeople and $1,000 for the home accessibility tax credit.
• Medical expense credit: reduced documentation for certain expenses from 2026, and an optional flat amount for items such as gluten-free food, incontinence products and service dogs.
• Volunteer firefighters and search and rescue volunteers will claim a single combined credit on $6,000 from 2027.
• Commission employees can claim travel or vehicle expenses under the general rules and still deduct other expenses against commission income, from 2027.

Retirement and disability savings

• “RRSP for life”: The government proposes merging the RRSP and RRIF, so you would no longer need to convert your RRSP at age 71. Minimum withdrawals would still apply after 71. Consultation closes 8 January 2027.
• RDSP: Parents, spouses and siblings will permanently be able to open and hold an RDSP for a family member.

Benefits

• One-time Canada groceries and essentials benefit (CGEB) supplement in early 2027, equal to half the annual maximum.
• Build Canada Workers Benefit: The Canada Workers Benefit is enhanced and renamed for 2027, with a higher maximum (for example, $3,143 for families). Advance payments drop to 25% in 2027 and end in 2028.

Investors and reporting

• Form T1135: The foreign property reporting threshold doubles from $100,000 to $200,000 for years ending after 2026.
• Instalments: The personal instalment threshold rises from $3,000 to $7,500 from 2028. Individuals whose main income is from a business may make one annual instalment of two-thirds of their tax, due 31 December.
• Farm and fishing property: The intergenerational rollover expands to nieces, nephews, grandnieces and grandnephews from 1 January 2027.

Dealing With the CRA

• More time to object: The deadline to file a notice of objection extends from 90 days to one year after the notice of assessment is sent. For individuals, it becomes the later of one year after the assessment and two years after the filing due date. This applies to assessments sent starting three months after Royal Assent.
• Higher penalties: Most fixed-dollar penalties will rise to reflect inflation, some will be scaled to taxpayer size, and new penalties will target repeated failures to file, for years ending after 2027.
• Tax debts reported to credit bureaus: The CRA will be able to report unpaid tax and GST debts over $50,000 to credit bureaus. This only applies once objection and appeal rights are exhausted, collection efforts have been made, and 30 days’ written notice has been given.

Other Measures Worth Knowing

• Non-resident property sellers: For dispositions on or after 1 January 2027, the section 116 withholding rate falls from 25% to 15% of the purchase price for most taxable Canadian property, and from 50% to 30% for specified property. Note the reduced rates apply to corporate non-resident vendors.
• GST/HST on massage therapy: Services by qualifying massage therapists will be GST-exempt for supplies made after 5 November 2026. This matters for BC’s registered massage therapists and their clients.
• Individual pension plans (IPPs): New anti-avoidance rules apply from 2028, and a plan whose assets exceed 200% of its liabilities could lose registration. If you have an IPP through your corporation, a review is worthwhile.
• Clean technology credits: The clean technology and clean electricity investment tax credits are extended to property available for use before 2041.
• Trusts with non-resident beneficiaries: The rule denying tax-free rollouts to non-resident beneficiaries now also catches indirect distributions through corporations or partnerships, effective 5 November 2026.
• Mineral exploration credits: The mineral exploration tax credit and critical mineral exploration tax credit are extended to flow-through share agreements signed by 31 March 2032, relevant to BC’s mining sector.

Key Dates at a Glance

What You Should Do Now

Most of these changes take effect in 2027 or later, but a few apply right away. Before year-end, consider:

• Owner-managers: whether new share issuances could qualify for the CGI, and the timing of capital purchases under the expanded immediate expensing.
• Investors: how the extended small business rollover could fit with planned share sales in 2027.
• Families and retirees: whether the refundable caregiver credit, RRSP-for-life proposal or RDSP changes affect your plans.

This article covers federal measures only. BC provincial tax changes are announced separately in the BC budget.

To read a detailed commentary on the proposed budget, please click here.

If you would like more information on this topic, please contact a member of the Empire CPA team by filling out the contact form below.

Canadian and foreign tax laws are complex and have a tendency to change on a frequent basis. As such, the content published above is believed to be accurate as of the date of this post. Before implementing any tax planning, please seek professional advice from a qualified tax professional. Empire, Chartered Professional Accountants will not accept any liability for any tax ramifications that may result from acting based on the information contained above.