2026 Federal Budget: Highlights and Takeaways for CPAs

November 06, 2026 

Introduction

The 2026 federal Budget, Masters of our Destiny, is not short on ambition, symbolism or new spending.

Canada has no shortage of challenges, and Budget 2026 seeks to address them all to varying degrees. Housing and homelessness, Indigenous reconciliation, competitiveness and innovation, rebuilding defence capacity and securing our cultural and national sovereignty; the government has committed to new spending, programs and measures on all of them.

The federal government's stated goal is building a stronger, more competitive and more sovereign Canada. However, that stronger Canada is being built on a foundation of debt. While the government has seen a revenue windfall, driven in part by higher energy prices, the country's deficit remains largely unchanged at $62.3 billion in 2026-27. 

The Budget frames this spending as an investment in the future of the country, and Budget 2026 includes measures that will boost Canada's economic performance over the mid- to long-term. Tax reforms, such as the Productivity Mega Deduction, the Canada Growth Incentive and the expansion of SR&ED to include commercialization activities – all measures CPA Ontario has advocated for – will help attract investment and support the innovation and entrepreneurship that Canada needs.

In Masters of our Destiny, the government has identified issues that have long bedeviled Canada's economy and demonstrated that it's willing to engage with business leaders, entrepreneurs and advocates to find practical solutions.

Canada has ambitions. Now the focus must be on execution.

By the Numbers

Budget 2026 reveals that Canada's fiscal and economic situation has improved since the 2026 Spring Economic Update. Unforeseen boosts in revenue, primarily driven by soaring oil prices, along with trimmed-down expenses, have strengthened the country’s position. At the same time, the balance sheet remains effectively unchanged as the government commits nearly 96 per cent of its fiscal breathing room to new spending measures aimed at driving investment and securing future economic growth. In total, Budget 2026 reports $151.5 billion in new program and infrastructure spending over the next five years, offset by a $158.3 billion improvement in its fiscal balance over the same time horizon.

GDP grew modestly in 2026 at 1.0 per cent, down ever so slightly by 0.1 per cent from the Spring 2026 projection. GDP is expected to improve to 1.7 per cent in 2027.  

The deficit now sits at $62.3 billion, $3 billion lower than projected in the 2026 Spring Economic Update ($65.3 billion), and down $4.6 billion from last year’s budget ($66.9 billion). Total spending is reported to be $602.6 billion. While the government expects the deficit to increase slightly to $62.5 billion next year, it is projected to continue falling to $52.9 billion by 2030-31. The federal debt-to-GDP ratio will hover at around 41 per cent over the next five years, on track with the Spring 2026 projection. The government claims it will meet its fiscal anchors (operational balance and a declining debt-to-GDP ratio) on schedule.

Other figures to note: unemployment has dropped to 6.5 per cent, as projected in the 2026 Spring Economic Update. While high energy prices generated unexpected income for the government, they have also driven up inflation to an average of 3 per cent over the last 6 months. The Consumer Price Index (CPI) inflation rate excluding gasoline prices has remained steady at around 2 per cent, once again on track with the 2026 Spring projection.

Tax Reform

Since CPA Ontario first released Tax Reform for Growth in Canada in October 2025, it has been calling on the federal government to make tax reform a central pillar of its economic strategy.  While Budget 2026 does not include a commitment to the full tax review that CPAs and a coalition of over 700,000 businesses and professionals have been calling for, it does introduce several measures that align with the priorities set out in CPA Ontario’s report.

The big-ticket item is the Productivity Mega Deduction announced during the Canada Investment Summit. Eligible investments acquired on or after September 15, 2026 can be deducted immediately, lowering the up-front costs of investment. It reduces the tax burden on new investment to about 6.4 per cent, which is less than the U.S. rate. About two thirds of capital investments will qualify for immediate expensing, compared to 15 per cent previously.

Limited exclusions still apply for certain assets that are long-lived, subject to regulated rates, or have a significant personal use component. The measure is also permanent, a change that CPA Ontario has advocated for since the federal government introduced the temporary Productivity Super Deduction in the 2025 Budget. Making the deduction permanent will give businesses the certainty they need to invest.

Joining the Productivity Mega Deduction are two tax measures designed to encourage entrepreneurship and support the commercialization of Canadian innovation, both of which are critical for helping Canada compete in a global economy that is increasingly driven by intangible assets like data and IP. The first is the Canada Growth Incentive. A two-pronged policy, the Canada Growth Incentive introduces a new tax exemption on up to $15 million in capital gains earned from eligible investments that are reinvested into Canadian startups, and enhancing the small business rollover, increasing the deferral of taxes on capital gains when proceeds are reinvested in another small business.

The Canada Growth Incentive aligns with CPA Ontario's recommendation in Tax Reform for Growth in Canada to defer taxation on realized capital gains if those gains are reinvested in another qualifying asset. This measure will help ensure that Canadian capital is put to productive use.

The second measure is the proposal to expand the SR&ED tax incentive program to include certain commercialization expenses. Eligible expenditures would include certain costs associated with bringing a new product or process to market, including obtaining necessary regulatory approvals or certifications and securing and maintaining intellectual property protection. In addition to the SR&ED, the federal government has committed to a Federal Intellectual Property Review to help innovators protect, commercialise and retain more intellectual property in Canada, including stronger research commercialization and safeguards against abusive patent practices.  

This measure is a strong signal that the federal government recognizes that capturing the value of innovation must be made an economic and national security priority. This is a view shared by CPA Ontario’s Competitiveness and Value Creation Task Force which is currently developing guidance for CPAs and Canadian enterprises to better create, capture, protect and scale the value of innovation.

In Budget 2026, the government has also announced its intention to introduce a corporate loss transfer rule, for which it will be seeking stakeholder feedback, on allowing the transfer of current-year non-capital losses within wholly owned corporate groups, eventually creating a simpler alternative to existing loss consolidation transactions.

Importantly for CPAs, the budget proposes to change the deadline to file returns and pay taxes owing—for all taxpayers—to May 15 from 2027 onwards. The government expects this measure to save Canadians about $230 million in interest and penalty payments over five years.

Tax Credits

Budget 2026 includes adjustments to a number of tax credits, and one net new tax credit measure.  

The first is the Canada Creative Credit. The government intends to consult with Canadians and the cultural sector on the creation of a non-refundable personal income tax credit for creators and artists. Combined with the Basic Personal Amount, this credit would provide tax recognition on up to $45,000 of annual qualifying net business income derived from original and creative artistic works.  Details on this credit will be announced in the 2027 Spring Economic Update.

On tax credit changes, Budget 2026 proposes to make the Canada Caregiver Credit, which provides financial support for fulltime caregivers of loved ones, fully refundable.  Over 580,000 caregivers would receive support, including 180,000 who currently receive no benefit.

Additional tax measures include expanding the eligibility for the Clean Electricity Investment tax credit to high-voltage intra-provincial electricity transmission lines in each province, for property acquired and available for use on or after Budget Day.

Budget 2026 also proposes to extend the Mineral Exploration Tax Credit and Critical Mineral Exploration Tax Credit for an additional five years, and the expansion of the Critical Mineral Exploration Tax Credit to include antimony.

The government is also extending the Canadian Journalism Labour Tax Credit to qualifying private audio and audiovisual news organizations (i.e. TV stations, radio stations, podcasters, streamers and content creators), in line with support provided to news organizations that produce written news. They would be eligible for the temporary enhanced credit rate of 35 per cent and labour expenditure limit of $85,000 per employee.

Simplifying the Tax System

A major pillar of the tax reforms in Budget 2026 are measures to simplify the tax system, a reform CPA Ontario has advocated for, for more than a year. Budget 2026 states simply "Canada's new government is committed to simplifying the tax system." The measures should be viewed as "a first step" toward simplification, with an explicit commitment that a second tranche of measures to further simplify the system will be announced in the 2027 Spring Economic Update, and that tax simplification is "a core priority."

Budget 2026 sets out five "guiding principles" for tax simplification:

• Putting the taxpayer experience at the centre of tax simplification
• Making tax rules easier to understand, comply with and benefit from
• Keeping the tax system responsive to change
• Reducing unnecessary interactions with the CRA
• Reducing burden while preserving fairness and integrity

The simplification measures introduced in Budget 2026 include amendments to the Income Tax Act to:

• Increase the instalment thresholds to $7,500 and index them to inflation.
• For 2028 and subsequent tax years, enable self-employed business owners to make a single payment of two-thirds of their net tax owing by December 31.
• Extend the timeframe to file a notice of objection by giving most taxpayers one year after a notice of assessment is sent to file an objection (individuals and graduated rate estates would have the later of that date and two years after their tax return filing due date).
• For taxation years that end after 2026, double the foreign property threshold (to $200,000) for filing a T1135, Foreign Income Verification Statement, and double the threshold for simplified reporting (to $500,000). The government expects this measure will eliminate approximately one-third of current filers.
• For 2027 and subsequent taxation years, the government will no longer make travel expenses under the Northern Residents Deductions dependent on whether an individual receives employer-provided travel benefits and will remove certain limits on the residency deduction. Overall, these changes are expected to provide residents with $99 million in support over four years, starting in 2027-2028.
• As of January 1, 2027, permanently allow a qualifying family member to open a Registered Disability Savings Plan on behalf of an adult whose ability to enter into a contract is in doubt and who does not have a legal representative.
• Introduce a “RRSP-for-Life” by eliminating the need to convert an RRSP to a RRIF at age 71. This change will not affect minimum withdrawal requirements after age 71.

Competition

Both competitiveness and competition are focal points of Budget 2026.

Competitiveness includes tax reforms, such as the Productivity Mega Deduction, and targeted investments in strategic sectors, such as mineral and critical mineral exploration. In addition, the government seeks to create a single federal development bank by merging Export Development Canada and the Business Development Bank of Canada. Further, the Canadian Commercial Corporation will become a subsidiary of this entity. Through the merger, Canadian businesses will enjoy a more integrated suite of financing solutions that can support them in their domestic growth all the way to their international expansion ambitions.  

Budget 2026 is not only focused on strengthening Canada's competitiveness, but also on increasing competition in Canada, to attract investment and expand consumer choice. The 2026 Spring Economic Update launched a Whole-of-Government Competition Plan, which is expanded upon significantly in Budget 2026.

Several measures are focused on consumers. The government intends to make it easier for consumers to switch providers, extending the concept of data portability to the telecommunications and transportation sectors, to be implemented once the framework under the Protecting Privacy and Consumer Data Act is established. The government intends to consult on reforms to address practices that prevent retailers from offering or advertising lower prices, such as suppliers pressuring stores not to discount items below a certain price. Additionally, the government wants to work with provinces and territories to end anti-competitive property controls that restrict competition in the retail grocery sector (building on a model developed in Manitoba) and to expand restrictions on non-compete agreements in employment contracts.  

The financial sector is also a focus, seeking to attract more entrants into the sector and to expand funding channels. Budget 2026 introduces a secondary competition objective for the Office of the Superintendent of Financial Institutions (OSFI) mandate. As a result, competition considerations will more consistently and clearly be a part of OSFI's supervision and regulation of the financial sector.

Budget 2026 also streamlines and accelerates the process to become a federally regulated financial institution, amending the Bank Act, Trust and Loan Companies Act and Insurance Companies Act to establish a one-year timeline for making decisions on applications by new entrants. In addition, Budget 2026 allows more flexibility for troubled financial institutions to transfer assets and liabilities, enabling private market solutions but also protecting depositors; enables financial institutions to scale by amending the Bank Act to allow greater flexibility on ownership structures, including more than doubling the threshold at which banks must transition to widely held ownership; and amending the Bank Act to provide greater flexibility for qualifying cooperative shareholders to invest in and control a federal credit union.

Finally, Budget 2026 seeks to expand funding channels available to households and businesses. As part of these efforts, the Canada Deposit Insurance Corporation Act will be amended to increase the deposit insurance limit to $250,000 (from $100,000), allow temporary high-balance coverage for certain life events, such as selling a house, and remove the limits for eligible deposits in registered and tax-free accounts.

Financial Crime

In September, the Financial Action Task Force (FATF) released its Mutual Evaluation Report for Canada. While Canada avoided "enhanced follow-up" status and was placed in the "regular follow-up" status, the report highlighted several deficiencies in Canada's money laundering and terrorist financing regime in areas including investigations and prosecutions, beneficial ownership and asset recovery.

Following on the announcement of the creation of the Financial Crimes Agency, the banning of unlawful crypto ATMs and the strengthening of AML and ATF supervision in the 2025 Spring Economic Update, Budget 2026 includes a number of new measures designed to address the deficiencies highlighted in the FATF Mutual Evaluation.

These include legislative measures to improve information sharing between the Financial Transactions Reporting and Analysis Centre (FINTRAC) and OFSI, as well as expanding FINTRAC's ability to obtain supervisory information from regulated entities. The government also proposes to expand anti-money laundering requirements to cover higher-risk gambling activities and extend the AML/ATF registration regime to dealers in precious metals and stones.

On investigations and prosecutions, the government is also proposing to strengthen its ability to dissolve corporations being used for fraudulent purposes and bring forward legislation to strengthen investigative tools targeting organized crime, including changes that would facilitate the recovery of the proceeds of crime.  Authorities with regulatory and enforcement responsibilities will also be given access to non-public beneficial ownership registry information.

Conclusion

The federal government's stated goal is to build a country that can face the challenges of a changing geopolitical order and more unstable world. And while Canada has emerged from trade conflicts and attacks on our sovereignty with resiliency, the key to becoming masters of our destiny is economic. Budget 2026 is moving us in the right direction. More can and should be done to put Canada on a stronger growth path.