The Canadian government presented the 2026 federal budget on November 5, under the themed title “Masters of our Destiny”. It contained several significant measures of interest to Canadians. Here are the highlights:
1. Tax filing and payment-due date changes for individuals
Budget 2026 proposes to simplify the personal income tax system by establishing a single May 15 tax filing and payment deadline for all individuals, beginning with the 2027 taxation year. Currently, most individuals must file their T1 tax return and pay any balance owing by April 30. Self-employed individuals, and their spouses or common-law partners, have until June 15 to file, although their taxes are payable by April 30. Under the proposal, both the filing deadline and balance-due date would move to May 15 for all individuals.
How could this affect you? The proposal provides most taxpayers with an additional 15 days to file their return and pay their taxes. Self-employed taxpayers would have to file a month earlier than previously allowed. This will eliminate the complexity that comes with having taxes owing on April 30, but a separate June 15 filing deadline for self-employed taxpayers.
2. Tax instalment threshold update
Budget 2026 proposes changes that would make tax instalments simpler and reduce the number of Canadians required to make them. The threshold for having to pay tax by instalments would increase to $7,500 for corporations and individuals, outside of Quebec, and would be indexed to inflation going forward. The threshold would increase to $4,500 for individuals resident in Quebec. Individuals whose primary source of income is from a business (including professional or commission income) would also have the option of making a single instalment payment equal to two-thirds of their combined federal-provincial net tax owing by December 31. These changes are expected to eliminate instalment requirements for nearly 1.1 million individuals and 185,000 small incorporated businesses, while simplifying the process for many self-employed individuals. The changes are proposed to take effect for the 2028 and subsequent tax years.
How could this affect you? For many taxpayers, the change will reduce the additional stress and steps required to make quarterly instalments. This can also improve cash flow by having money remain with businesses until taxes are ultimately due.
3. Registered Retirement Savings Plan (RRSP) and Registered Retirement Income Fund (RRIF) modernization
Budget 2026 announces the government's intention to modernize retirement savings by combining the core features of RRSPs and RRIFs into a single "RRSP for life”. Individuals would no longer need to convert their RRSP to a RRIF at age 71, although minimum annual withdrawals would still be required after age 71. These changes remain subject to consultation, and as such, details and the effective implementation date have not yet been provided.
How could this affect you? Further details are needed on this measure; however, the expectation is less administration and more simplification.
4. Increase to Foreign Income Verification Statement filing thresholds (T1135)
Budget 2026 proposes to significantly reduce foreign-property reporting requirements under Form T1135. For taxation years and fiscal periods ending after 2026, the cost amount of specified foreign property that triggers T1135 reporting would increase from $100,000 to $200,000. In addition, the threshold for using the simplified T1135 reporting method would increase from less than $250,000 to less than $500,000.
How could this affect you? This measure is expected to eliminate the requirement for approximately one third of taxpayers to file Form T1135 with the CRA.
5. Canada Growth Incentive capital gains exemption
Budget 2026 proposes a new Canada Growth Incentive (CGI) capital gains exemption aimed at encouraging investment in Canadian businesses. A qualifying individual could claim an exemption on capital gains realized on qualifying shares, up to a $15 million limit for each individual in respect of each qualifying business. Trusts would not qualify.
Generally, the shares must be newly issued by a Canadian-controlled private corporation (CCPC) solely for cash or in exchange for employment services. The combined carrying value of the assets of the corporation and related corporations must not exceed $100 million immediately before and after issuance, and the shares must be held for at least 36 consecutive months immediately before disposition.
Various businesses and sectors, including professional and consulting services, agriculture, fishing, forestry, mining, financial services, insurance and real estate, would not qualify. The exemption would apply to qualifying shares issued on or after budget day and before 2037. Exempt gains would remain subject to a 30% inclusion rate for Alternative Minimum Tax purposes. Claiming the CGI could restrict use of the Lifetime Capital Gains Exemption on shares of the same corporation.
How could this affect you? For certain business owners, there is a large incentive to create and grow their business and be able to exit from that business without significant taxation.
We will be publishing a full report on the federal budget on the morning of November 6.