Budget 2026 Tax Measures: What Changes for Individuals, Owner-Managers and Corporations

Budget 2026 centers on one idea: simplification. Many proposals replace receipts and detailed calculations with optional flat amounts, move filing deadlines, and ease administrative requirements, while a new capital gains incentive and tougher penalties round out the package. Below is a summary of the measures we think matter most for our clients. The full presentation, with eligibility rules, effective dates and our commentary, is available to download at the end of this post.

Personal credits and deductions

From 2027, the Canada Caregiver Credit becomes refundable, so caregivers benefit even with little or no tax owing. Eight claims, including moving expenses ($1,000 per relocation), the adoption expense credit ($1,200 per child), gluten-free food ($1,000 a year, from 2026) and service dogs ($2,000 a year), get an optional flat amount instead of receipts. These amounts are low, so we see them as a last resort when documentation is not available. Commission employees can claim general travel and vehicle costs alongside other commission expenses, and four medical expenses, including insulin and CPAP machines, no longer need a prescription.

Investment and growth incentives

The proposed Canada Growth Incentive would exempt up to $15 million of capital gains per business on qualifying shares issued on or after Budget Day and before 2037. The conditions are restrictive: shares must be issued directly to an individual aged 18 or over (not a trust) for cash or services, held for at least 36 months, and the corporation must meet asset tests at issuance, throughout ownership and at sale. Consulting, professional practices, resource sectors, real estate and franchises are excluded. The small business rollover gets a longer reinvestment window (the year of sale plus three years, or five with a SAFE), and SR&ED expands to cover regulatory testing and IP registration costs.

Filing and administration

From 2027, all individuals would file and pay their T1 by May 15. Installment thresholds rise from $3,000 to $7,500 in 2028, and business owners could make a single annual installment of two-thirds of net tax on December 31. Objection deadlines would extend to one year, the Form T1135 filing threshold would double to $200,000, and the CRA could report tax debts over $50,000 to credit bureaus.

Corporate and international measures

CCPCs would be exempt from Part VI.1 tax on preferred share dividends, and certified directors' resolutions would no longer be needed for elections such as capital dividend elections. Trust rollouts to corporations with any non-resident shareholder are blocked, with no de minimis threshold. Section 116 withholding falls to 15% and 30% from January 1, 2027, and fixed-dollar penalties rise two to three times, with multiples of 3x and 8x for medium and large entities.

Open consultations

Consultations on RRSP for life, the taxable preferred share regime and corporate loss transfers within wholly owned groups close on January 8, 2027.

Download the full Budget 2026 Tax Measures presentation (PDF)

This summary is for general information only and reflects proposals that may change before they are enacted. Please contact us to discuss how these measures apply to your situation.