Canada's 2026 federal budget proposes major tax incentives for business investment and innovation, new personal tax credits and benefit supplements, and changes to real estate ownership restrictions, banking regulations, and cultural sector support.
The Canadian federal government tabled its proposed 2026 federal budget on 5 November 2026.
Official documentation released by the Department of Finance Canada outlines a comprehensive fiscal blueprint focused on boosting business productivity, providing direct relief to households, and strengthening national economic sovereignty. The fiscal program proposes changes to corporate and personal taxes, real estate and banking regulations, including tax credits, sectoral incentives and statutory updates.
The key measures are as follows:
Business tax reforms and capital investment incentives
- Marginal tax rate reduction via the productivity mega deduction: Canada’s proposed Productivity Mega Deduction would reduce the marginal effective tax rate on new business investment from 13% to 6.4%, encouraging investment in modern facilities, equipment and productivity-enhancing technologies.
- Capital gains tax exemption through the Canada Growth Incentive: To help high-potential businesses attract equity and retain growth capital within the country, the government introduced the Canada Growth Incentive. This policy creates a new tax exemption on up to CAD 15 million in capital gains derived from eligible investments. In addition, the measure enhances the existing small business rollover provision, allowing investors and business owners to defer capital gains tax liabilities when reinvesting sales proceeds into eligible expanding Canadian enterprises.
- Expansion of scientific research and experimental development tax incentives: To bridge the gap between scientific innovation and commercial deployment, the federal budget allocates CAD 930 million to expand the Scientific Research and Experimental Development (SR&ED) tax incentive program. This will allow eligible businesses to claim tax credits for expenses related to commercialising and launching new technologies.
Personal income tax adjustments, benefit supplements, and caregiver relief
- Refundable Canada Caregiver Credit: Canada proposes a fully refundable caregiver credit of up to CAD 1,260 annually from the 2027 tax year for eligible individuals caring for elderly or disabled dependents, with the amount indexed to inflation.
- Canada groceries and essentials benefit supplement: The government will introduce a one-time 50% increase for the 2026-27 benefit year delivered in early 2027, providing up to CAD 339 for a single person without children and up to CAD 679 for a couple with two children.
- Enhanced worker benefits and systemic tax simplification: The new Build Canada Workers Benefit will increase income support for lower-income workers, potentially lifting 240,000 people out of poverty. The government will also simplify tax filing requirements under the Income Tax Act to make returns, tax relief and benefit claims easier to manage.
Real estate restrictions, banking rules, and sectoral tax credits
- Two-year extension of the foreign residential property ban: To curb non-resident housing speculation, the Canadian federal government proposed extending the ban on foreign ownership of Canadian residential real estate by two additional years, pushing the ban’s expiration date to 1 January 2029.
- Bank Act ownership thresholds and regulatory flexibility: The government proposed Bank Act amendments to promote competition by raising the equity threshold for broader bank ownership requirements from CAD 12 billion to CAD 25 billion and exempting foreign bank subsidiaries with less than CAD 8 billion in equity from public float requirements.
Sector-specific tax credits for media and cultural production
- Canadian Journalism Labour Tax Credit: The budget extends the journalism labour tax credit to qualifying private audio and audiovisual news organisations, aligning support with established written news credits.
- Canada Creative Credit: The proposal establishes the Canada Creative Credit, providing specialised tax relief for Canadian artists and cultural entrepreneurs to foster domestic artistic production.
