Budget 2026 proposes a new Canada Growth Incentive capital gains exemption of up to $15 million per individual for each business, limited to qualifying shares issued on or after Budget Day and before 2037. It also proposes a longer reinvestment window for the existing small business rollover, with a path of up to five years for SAFEs, and a looser active-business asset test. The budget text cited here does not describe a change to the Lifetime Capital Gains Exemption holding period.
Budget 2026 confirms the Productivity Mega Deduction, announced in September 2026, as a permanent immediate-expensing measure for eligible assets acquired from September 15, 2026, with a limited list of excluded assets. It also proposes to raise the development-expense deduction rate to 100 per cent and to extend the clean electricity and clean technology investment tax credits to property available for use before 2041.
Budget 2026 proposes a set of filing and compliance changes, including a single May 15 individual filing and payment date from 2027, higher instalment thresholds from 2028, and a one-year objection window. It also proposes relief on reporting and corporate paperwork and invites comments by January 8, 2027 on preferred shares and corporate loss transfers. Alongside these, it proposes higher fixed administrative penalties for taxation years ending after 2027.
Budget 2026 builds on the Comprehensive Expenditure Review from Budget 2025, restating a $13 billion annual savings target by 2028-29 and a 20% cut in consulting spend. Beyond staffing, it names Canada Post modernisation and consolidation of federal financing Crown corporations as measures with savings or efficiency aims, and notes that some savings remain to be identified at a future date.
The budget reviewed does not describe changes to age or pension credits or to benefit phase-out thresholds. Its senior-relevant measures are higher tax instalment thresholds, an intended merger of RRSP and RRIF rules, an expanded intergenerational farm and fishing rollover, and CPP delivery modernisation, alongside forecasts for inflation-indexed Old Age Security payments.
Budget 2026 would establish the Canada Strong Fund with an initial $25 billion over three years, to invest in Canada alongside private partners on commercial terms and take minority positions. It would be an arm's-length Crown corporation with its own board and CEO, with returns reinvested and a retail Canada Strong Notes product planned for 2027. Legislation and the Fund's detailed rules are still to come.
Budget 2026 proposes long-term operating concessions of 40 to 50 years for Canada's four largest airports, with Canada retaining ownership of lands and assets and the Canada Strong Fund and Indigenous communities taking equity stakes. It proposes $37.6 million and legislation to launch the first concession, with an operator selected by early 2029, and says proceeds would be reinvested including in regional airports. It also announces an intention to explore divesting other non-core federal commercial assets.
Budget 2026 builds on Build Canada Homes with a proposed $13 billion capital increase and funding to service federal land. For buyers, it extends the foreign purchase ban on existing homes, changes mortgage insurance for three- to fifty-unit properties from February 1, 2027, and says options for homeownership financing are still being explored. For rental supply, it proposes widening the interest deductibility exception for purpose-built rental housing.
Budget 2026 proposes funding to implement the 2027-2029 Immigration Levels Plan, a pathway to permanent residency for up to 200,000 temporary residents, and Temporary Foreign Worker Program reforms. It also reports progress on the previously announced International Talent Attraction Strategy and introduces the Canada Growth Incentive, a capital gains exemption aimed at encouraging founders and investors to build and reinvest in Canada. The budget text reviewed does not describe a graduate retention incentive.
Budget 2026 proposes to expand SR&ED eligibility to certain commercialisation costs, including regulatory approval testing and IP protection, at an expected $930 million over five years and $235 million ongoing. The Canada Revenue Agency will also work to provide sector-specific guidance on eligibility. The budget describes existing credit rates and 2025 enhancements, and the text reviewed does not propose changes to refundability or ownership-based rules.
Budget 2026 proposes the Canada Growth Incentive, a capital gains exemption on up to $15 million plus a wider small business rollover, costing $715 million in tax relief over four years. It reaffirms up to $750 million in BDC early and growth stage investment, expands the Canada Growth Fund's mandate, and points to the Canada Strong Fund for further direct equity. Pension capital is referenced through voluntary commitments of nearly $100 billion and airport concessions.
Budget 2026 supports AI adoption through a mix of measures: the Productivity Mega Deduction announced in September covers software purchases, and the budget announces access to 500 MW of sovereign AI compute through financial tools. It also describes previously announced Mitacs placements and an open-source consortium for small businesses, alongside direct equity in Cohere of up to $1.6 billion.
Budget 2026 highlights Indigenous equity ownership through the $10 billion Indigenous Loan Guarantee Program, including the Tla'amin Nation Tree Farm, a $715 million guarantee for Darlington, and an offer of a 15% Trans Mountain stake. It proposes consolidating the guarantee program in the Canada Infrastructure Bank and a new $451.8 million Indigenous workforce fund, and describes $32 billion over 10 years for First Nations housing and infrastructure.
Budget 2026 points to Bill C-39, introduced in September 2026, to set a one project, one decision, one year approach to federal approvals, with a target of reviews and decisions within one year. Funding is proposed for a major projects management entity and for specific projects, so support is tied to selected projects rather than being a general default. It also proposes extending clean energy tax credits to 2040 and about $4 billion for electricity infrastructure.
Budget 2026 describes federal and intergovernmental work on internal trade, including a new 30-day credential recognition standard, progress toward model mutual recognition legislation, and sector reforms. It does not describe new federal transfer conditions tied to internal trade.
Budget 2026 projects a declining deficit-to-GDP ratio and balanced operating spending by 2027-28, and says the deficit will be fully accounted for by capital investment from 2027-28. It discloses rising public debt charges, the bridge from deficits to financial requirements and borrowing, an interest-rate sensitivity, and contingent liabilities including loan guarantees.
Budget 2026 combines household supports with some changes for small businesses. For households it proposes a one-time 50% Canada Groceries and Essentials Benefit supplement, a larger Build Canada Workers Benefit and a refundable caregiver credit, and it extends the fuel excise tax suspension and funds heat pump rebates. For small businesses and the self-employed it proposes higher tax instalment thresholds and a single May 15 deadline.
Budget 2026 says Canada is on track to reach 4% of GDP on defence this decade and 5% by 2035, with more than $700 billion over five years from 2026-27. It proposes $2.3 billion for the Defence Drone Initiative and directs up to $2.7 billion of previously announced funding to Defence Industrial Strategy priorities, including domestic inputs for munitions and armoured vehicles. It also covers the Defence Investment Agency, small-firm financing and a proposed Defence, Security and Resilience Bank.
Budget 2026 proposes $1.2 billion in 2027-28 to extend mental health and home care agreements until March 31, 2028, and projects the Canada Health Transfer rising to $67.7 billion by 2030-31 under its existing escalator. On child care, it reaffirms previously announced funding of up to $5.4 billion over two years and a four-year Ontario extension, and projects transfers declining after temporary funding ends.
