Market Insights (Special Report) - Budget 2026: No Tax Rate Changes, Plenty to Plan for

Steve Nielsen, CFP, CIM, Chief Investment Officer. Based on Budget 2026 as tabled November 5, 2026. All measures described are proposals.

What changed, and what didn’t

Ottawa tabled Budget 2026 on November 5, and it leaves personal and corporate tax rates unchanged (1, 2). Instead, it offers a large new tax break for people who start or back growing Canadian companies, trims paperwork across the personal tax system, and opens a consultation on how RRSPs work after age 71.

Below are the measures we think matter most for our clients: business owners, professionals and their families, and retirees. Most would start with the 2027 tax year, and all of them are still proposals.

For business owners

The headline measure is the Canada Growth Incentive, a capital gains exemption of up to $15 million per person for each qualifying business (1, 2, 4). It covers only new shares issued from November 5, 2026 to the end of 2036, so shares you already own won’t qualify.

The conditions are strict. Shares must be issued directly to you by a Canadian-controlled private corporation, for cash or for your work there, and held for at least 36 months before a sale (4). Shares held through a family trust or holding company don’t qualify (2). Many familiar businesses are excluded: professional practices such as medicine, law, accounting, engineering and architecture, along with consulting, real estate, farming, mining, financial services, hospitality and franchises.

Exempt gains would still count toward the alternative minimum tax, at 30% of the gain, and using this exemption limits the existing lifetime capital gains exemption on the same company’s shares (2, 4).

Two other changes help owners and private investors. The small business rollover, which defers tax when sale proceeds are reinvested in another eligible small business, would allow reinvesting until the end of the third calendar year after the sale, or up to five years under a future-equity agreement, for sales from January 1, 2027 (2, 4). And Canadian-controlled private corporations would no longer pay the special Part VI.1 tax on dividends from taxable preferred shares, effective November 5, 2026 (2).

If your company sponsors an Individual Pension Plan, expect tighter rules. From 2027, plans whose members are all related to the owner would count as IPPs regardless of size. From 2028, IPPs would face the same investment and advantage rules as RRSPs and TFSAs, and a plan whose assets exceed 200% of its pension liabilities could lose its registration (2, 4).

CRA penalties are also going up. Older fixed-dollar penalties would rise two- to threefold for inflation, and certain penalties would be three times higher for corporate groups with more than $10 million of taxable capital and eight times higher above $50 million (2, 4). Asset-heavy companies such as real estate, construction and farm corporations can cross those lines without large profits. This would start with tax years ending after 2027.

For retirees

The government wants to merge RRSPs and RRIFs into a single “RRSP for life” (2, 3, 4). You would no longer have to convert your RRSP to a RRIF at 71, but minimum annual withdrawals would still apply after that age. Ottawa is also weighing a successor holder option, so a surviving spouse or partner could take over the plan, and simpler tax-free transfers to qualifying survivors.

This is a consultation for now, with comments due January 8, 2027, so there is nothing to do yet. We will follow it closely, as it could make estate planning simpler for many couples.

Smaller changes help retirees and the families who care for them. The Canada Caregiver Credit, worth about $1,260 in 2027 for most eligible dependants, would become refundable, so caregivers with little or no tax owing would still receive it (1, 4). Medical expense and home accessibility claims would also get simpler, as described under Less paperwork at tax time below.

For professionals and families

Tax day would move. Starting with 2027 returns, every individual, including the self-employed and their spouses, would file and pay by May 15 (2, 3, 4). Nothing changes for your 2026 return: it is due April 30, 2027, or June 15, 2027 for self-employed households, with any balance owing still due April 30.

Instalments would get simpler from 2028. Quarterly instalments would apply only if you owe more than $7,500, up from $3,000 (2, 3). Self-employed professionals and others whose main income is from a business could instead make one payment by December 31, equal to two-thirds of the year’s tax, as farmers and fishers do today.

Foreign property reporting would get lighter. From the 2027 tax year, Form T1135 would be required only when foreign holdings, such as US shares in a non-registered account, cost more than $200,000, double today’s threshold, and simplified reporting would apply below $500,000 (3, 4).

Families with trusts, farms or foundations should note three changes. A family trust could no longer roll property out tax-free to a company or partnership with a non-resident owner, effective November 5, 2026 (2, 4). Farm families could pass qualifying farm property tax-free to nieces and nephews from 2027, not just to children and grandchildren. And private foundations would trade the 20% excess corporate holdings rules for a simpler ban on controlling a company, also from 2027.

The deadline to object to a CRA assessment would become fixed for individuals, at the later of one year after the assessment or two years after the filing due date, with no extensions (2, 3). The CRA could also report unpaid tax debts over $50,000 to credit bureaus once appeal rights are used up. Separately, CDIC deposit insurance would rise to $250,000, with temporary extra coverage for events such as a home sale (4).

Less paperwork at tax time

Budget 2026 proposes optional flat amounts for several deductions and credits, so you could claim a set figure instead of keeping and adding up receipts (2, 4). You would still need to qualify, and you could still claim your actual costs when they are higher.

Starting with the 2027 tax year, the flat amounts would be $1,000 for an eligible move, $1,500 a year for construction tradespeople and apprentices working away from home, a one-time $1,000 for home accessibility renovations, $1,200 per child in the year an adoption is completed, and $1,000 a month, up to $12,000 a year, for the clergy residence deduction (2, 4).

Medical expenses would get the same option: $1,000 a year for gluten-free food for someone with celiac disease, starting with 2026 returns, and from 2027, $500 a year for incontinence products and $2,000 a year for service dog care (2, 4). Some medical expenses would also no longer need a prescription, and for others a medical practitioner’s confirmation of the condition would replace it (2).

In most cases only one person can use a flat amount for the same expense, such as one spouse after a move or one parent for an adoption (4). Where real costs are large, such as a major renovation, an adoption or a long-distance move, a detailed claim will usually be worth more.

Key dates at a glance

Most measures would start in 2027 or 2028, but three would reach back to Budget Day once passed.

Shaded rows would apply from Budget Day, November 5, 2026, once the legislation passes. Source: Budget 2026 as summarized by MNP, SquareOne CPA and the Financial Post.

What we suggest now

For most clients, nothing needs to change before year-end, and your 2026 tax return works as it always has. A few situations are worth a call now.

If you are starting a company or investing in a new one, talk to us and your accountant before the shares are issued. Whether the $15 million exemption is available depends on who holds the shares and how, and that is hard to change later.

If your company has an IPP, we will review its surplus against the proposed 200% test well before 2028. And if a family trust has non-resident beneficiaries, check any planned distribution with your tax advisor first.

These are proposals, not law

Everything in this report is a proposal. Budget measures become law only after Parliament passes the implementing legislation and it receives royal assent, and details can change or be dropped along the way. Some pieces, including the RRSP for life and the anti-avoidance rules for the Canada Growth Incentive, are still at the consultation stage or not yet released (2, 3).

Please talk to us before acting on any of these changes, keeping in mind that a few would apply back to November 5, 2026 once passed. We will update you as the legislation is released.

Sources

1. Government of Canada: Budget 2026, Masters of Our Destiny (Nov 5, 2026)
2. MNP: 2026 Federal Budget Highlights (Nov 2026)
3. Financial Post, Jamie Golombek: Budget 2026, Five Tax Changes You Need to Know About (Nov 5, 2026)
4. SquareOne CPA: Federal Budget Commentary 2026 (Nov 5, 2026)

All amounts are in Canadian dollars. This summary reflects Budget 2026 as tabled on November 5, 2026, and is general information, not tax or legal advice. All measures described are proposals and may change before they become law.

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