Budget 2026 focuses on simplifying the tax system, encouraging business investment and supporting economic growth through new tax incentives and reinvestment opportunities. It also introduces initiatives focused on technology, fraud prevention and reducing administrative requirements for businesses and taxpayers.
The proposed tax changes aim to simplify tax filing, reduce administrative requirements, and provide additional flexibility for individuals and businesses.
Key changes include:
1. New Tax Filing Deadline: Individual tax filing and payment deadlines would move to May 15, including for self-employed individuals and their spouses, starting with the 2027 tax year.
2. Simplified Tax Credits and Deductions: Documentation requirements would be reduced, with optional flat-rate claims introduced for expenses such as moving, medical, disability-support, home accessibility and adoption expenses.
3. Higher Tax Instalment Threshold: The instalment threshold would increase from $3,000 to $7,500 for individuals and corporations outside Quebec. Some self-employed individuals could also make one annual instalment instead of quarterly payments, beginning in 2028.
4. Increased T1135 Reporting Thresholds: The foreign property reporting threshold would increase from $100,000 to $200,000, while the simplified reporting threshold would rise from $250,000 to $500,000.
5. Longer Objection Deadlines: The general deadline to object to a tax assessment would increase from 90 days to one year, giving taxpayers more time to dispute assessments.
6. Increased Tax Penalties: Several existing tax penalties would increase and become indexed. Higher penalties would also apply to certain medium and large corporations and repeat offences.
7. Changes to Taxable Preferred Shares: Certain corporate taxes on dividends paid by Canadian-controlled private corporations (CCPCs) on taxable preferred shares would be eliminated, with changes effective November 5, 2026.
8. New $15 Million Capital Gains Exemption: A new exemption of up to $15 million would be introduced for qualifying individuals selling shares in eligible businesses. However, eligibility would be more restrictive than the existing Lifetime Capital Gains Exemption, with many industries excluded.
9. Future Tax Simplification: The government is considering additional measures, including allowing corporate loss transfers within wholly owned corporate groups and introducing an "RRSP for life."
What This Means for Taxpayers
These proposed changes could make tax filing simpler, reduce instalment requirements, provide more time to dispute assessments and create new tax-planning opportunities for eligible business owners. However, some changes may also result in increased penalties for non-compliance.
Taxpayers and business owners should stay informed as these proposals develop and consult with their accounting professionals to understand how the changes may affect their tax planning. Contact our team with Reschke Fritz LLP for more information on how these changes could impact you and your business.