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Federal budget 2026 includes several tax and investment measures, but how do they affect the average family?
After a relatively boring budget last year, the Federal Budget in November 2026 introduces several simplifications for taxpayers. The biggest tax and investing incentives are focused on encouraging business investment rather than providing broad personal income tax cuts.
The Budget proposes that registered retirement savings plans (RRSPs) will have no mandatory registered retirement income fund (RRIF) conversion at age 71. Currently, an account holder must open a RRIF and transfer their RRSP by no later than December 31 of the year they turn 71.
This is an administrative simplification rather than a tax break. Mandatory withdrawals that follow the current RRIF schedule and rise with age would still begin by age 72.
The Budget proposes making an existing temporary rule into a permanent one to allow a parent, spouse, common-law partner, or sibling to open and manage a registered disability savings plan (RDSP) for an adult.
For beneficiaries whose contractual capacity is in doubt, this would avoid having to first obtain formal legal authority through a guardianship or similar process.
This could make it easier to open RDSPs and get access to valuable government grants and bonds, building tax deferred savings for someone who qualifies for the disability tax credit.
Foreign investment reporting thresholds are set to double.
The T1135 Foreign Income Verification Statement filing threshold would increase from $100,000 to $200,000 for specified foreign property. The simplified reporting option would apply below $500,000 instead of $250,000.
This would be effective for taxation years or corporate fiscal periods ending after 2026 and reduce paperwork for investors in taxable U.S. or foreign stocks outside their registered accounts, as well as foreign rental properties and other property. (How to report foreign income in Canada.)
A new May 15 personal tax deadline could apply beginning with 2027 tax returns filed in spring 2028. All individuals would have until May 15 to file and pay their balances owing, representing a 15-day extension from the typical April 30 deadline.
However, the June 15 filing deadline for the self-employed and their spouses would now be one month earlier under the May 15 deadline that would apply to all personal taxpayers. This would mean most Canadians would get more time to file their tax returns, and accountants would get more time to prepare them.
The bane of many retirees and business owners is their tax installment requirement. Unlike employees, retirees and self-employed taxpayers may not have enough tax withheld at source and generally owe tax when they file. Taxpayers whose net tax owing exceeds the applicable threshold in the current year and either of the two preceding years generally must make installments throughout the year.
Beginning in 2028, tax owing thresholds that would trigger installment requirements would increase from $3,000 to $7,500 for most individuals outside Québec as well as corporations, and from $1,800 to $4,500 for Québec resident individual taxpayers.
Self-employed Canadians could also make one annual tax instalment under the budget proposals. Beginning in 2028, individuals whose primary income is from business, professional, or commission activities could make one payment of two-thirds of their annual combined net tax owing by December 31, instead of quarterly payments.
This non-refundable tax credit may soon be refundable. Beginning with the 2027 tax year, eligible caregivers could receive the credit even if they have little to no tax payable.
For 2027, the refundable credit could provide up to $1,260 of federal tax relief for certain infirm adult dependents. A non-refundable credit often provides little benefit to caregivers who have a low income and care for a family member, so this proposal could help them.
A one-time grocery benefit supplement could be paid in early 2027. It would provide an additional one-time payment of up to $339 for an eligible single individual without children or $679 for a couple with two children. The benefit is income-tested, so households with higher income would receive less or nothing.
Beginning in 2027, eligible taxpayers could choose optional flat amounts instead of tracking actual expenses for certain tax claims. Examples include $1,000 for moving expenses, $1,500 for tradespeople’s labour mobility expenses, and $1,200 per child for adoption expenses.
The flat amount is not necessarily the best option for all taxpayers, but the simplification is welcome.
Medical expense claims could become easier with proposed optional flat expense amounts, including $1,000 for eligible gluten-free food expenses for people with celiac disease and $500 for eligible incontinence products.
Taxpayers will have more time to object to CRA assessments and reassessments. Currently, most taxpayers have 90 days to object to a CRA assessment, with the option to request an extension of up to one additional year. Budget 2026 proposes extending the standard objection period to one year.
The CRA already approves most extension requests, so the government is effectively building that extra time into the regular deadline.
CRA could begin reporting large tax debts to credit bureaus. Unpaid income tax or sales tax debts exceeding $50,000 could be disclosed once objection and appeal rights are exhausted.
A tax debt could therefore affect someone’s ability to borrow or obtain a mortgage. A genuinely disputed assessment still subject to objection or appeal would not qualify for disclosure under the proposed rules.
Budget 2026 proposes a new Canada Growth Incentive capital gains exemption, separate from the existing Lifetime Capital Gains Exemption. Eligible Canadian residents could shelter up to $15 million in capital gains on qualifying shares, with the limit applying separately to each qualifying individual for each business.
The catch is that it is primarily an incentive for founders and investors in selected Canadian growth businesses. The proposed exemption excludes:
Shares generally must be newly issued for cash or qualifying employment services and held for at least 36 months. The corporation must also meet detailed Canadian business activity and asset tests.
There could also be more flexibility to defer capital gains when selling qualifying small business shares and reinvesting the proceeds in shares of another eligible Canadian business. The Budget proposes extending an existing capital gains rollover that allows individuals selling qualifying small business shares to defer tax by reinvesting in shares of another eligible Canadian business.
The reinvestment period would increase from the year of sale plus one year to the year of sale plus three years, with up to two additional years for certain future equity agreements. Some eligibility requirements would also be relaxed, effective for qualifying sales beginning January 1, 2027.
The government is also proceeding with previously announced Productivity Mega Deduction proposals allowing immediate expensing of a much broader range of qualifying capital investments acquired after September 14, 2026. A qualifying business purchasing equipment or technology could potentially deduct the full cost immediately instead of depreciating it over several years.
Budget 2026 includes more tax changes worth discussing than Budget 2025. Most proposals result in simplifications and improvements to tax procedures as opposed to significant tax savings for individuals and families.
Business owners seem to be the ones with the most meaningful tax cuts, but only certain types of businesses will qualify.
These measures are proposals, not enacted law. Their effective dates vary, and some remain subject to consultation, so the final rules and implementation dates could change.
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