Budget 2026: The Tax Changes Proposed for Individuals and Corporations

Budget 2026, tabled on November 5, 2026, proposes several tax changes for individuals and corporations. A later personal filing date, higher instalment and foreign-property thresholds, a refundable caregiver credit, a one-time grocery supplement, and a new capital gains exemption for certain newly issued shares are the items most likely to affect clients. The effective dates matter. These are government proposals, not automatic changes to the rules that apply today, and legislation still has to follow.

When each proposal would start

A proposed May 15 tax deadline

Today, most individuals file a T1 and pay any balance by April 30. Self-employed individuals and their spouses or common-law partners may file as late as June 15, but any balance owing is still due on April 30.

Starting with the 2027 tax year, Budget 2026 proposes one filing date and one payment date for everyone: May 15. That includes self-employed individuals and their spouses or common-law partners.

• Most individuals would move from April 30 to May 15 for both filing and payment.
• Self-employed individuals and their spouses or common-law partners would file on May 15 instead of June 15.
• Their tax balance would move from April 30 to May 15. Filing would be earlier than today. Payment would be later.

The first returns on this schedule would be filed in 2028. The 2026 personal return prepared next spring is not on this schedule. Corporate T2 filing dates are a separate set of rules, collected in the corporate tax deadlines guide.

Fewer people would need tax instalments

Instalments are advance payments. They change when tax is paid. They do not change how much tax is owed. Interest can still apply when a required instalment is late or too small. The corporate instalment guide describes the rules in force now, including the current $3,000 corporate threshold.

For tax years beginning on or after January 1, 2028, the budget proposes higher thresholds, indexed to inflation and rounded to the nearest $500:

• $3,000 would rise to $7,500 for corporations, and for individuals living outside Quebec.
• $1,800 would rise to $4,500 for individuals in Quebec. Quebec's figure is a federal threshold, because Quebec collects its own personal income tax.

The test would still look at the current year and either of the two previous years. The budget's own example is an individual living outside Quebec who would have to pay instalments for 2028 only if net tax owing for 2028 is more than $7,500 and net tax owing for either 2026 or 2027 is also more than $7,500. Any tax above the instalments would still be due on the balance-due date.

One December payment for business income

Individuals whose main income is from a business, including professional income or commissions, could make one instalment on December 31 instead of quarterly payments. That payment would be two-thirds of the year's combined federal and provincial net tax owing. The rest would be due on the balance-due date. If both this proposal and the May 15 proposal are enacted, that balance-due date would be May 15.

Farmers and fishers can already use a December 31 payment of two-thirds. The proposal would extend that timing to other business income. It would apply to 2028 and later years. It is a timing option, not a reduction in tax.

A refundable Canada caregiver credit

The Canada caregiver credit is currently non-refundable. It reduces tax only when there is tax to reduce. Starting in 2027, the budget proposes to make it refundable, so an eligible caregiver could receive the credit even with little or no tax payable. The design of the credit would otherwise stay the same, including annual indexation.

For 2027, the budget sets out these maximum credit amounts. The dollar figure on the return is not the payment.

The credit amount is reduced dollar for dollar by the dependant's net income above $21,136 in 2027. There is no income test for an infirm child under 18. Where the spouse credit or the eligible dependant credit, combined with the lower caregiver amount, produces less relief than the higher $9,001 amount would, a top-up makes up the difference. Different family circumstances produce different claims. The refundable amount, if the proposal is enacted, is the relief the credit calculates, not a flat cheque.

A one-time groceries and essentials top-up

The Canada Groceries and Essentials Benefit, formerly the GST credit, is a non-taxable, income-tested payment. For the July 2026 to June 2027 benefit year, the current maximums are $445 per adult, $234 per child, and $234 for the single supplement. Those amounts are paid quarterly. They phase out at 5 percent of 2025 adjusted family net income above $46,432. For a single adult without children, the single supplement phases in at 2 percent of 2025 net income above $11,564.

Budget 2026 proposes one extra payment in early 2027, equal to half of those maximums:

• up to $223 per adult;
• up to $117 per child;
• up to $117 for the single supplement.

For this supplement only, the phase-in rate would be 6 percent and the phase-out rate would be 15 percent, so the top-up would be fully phased in and fully phased out at the same income levels as the regular benefit. These are maximums. They are not payments everyone will receive. The supplement is one time. It is not a permanent increase to the quarterly benefit.

Less T1135 reporting for some foreign investments

Form T1135, the Foreign Income Verification Statement, is required when the total cost of specified foreign property is above a threshold at any time in the year. Specified foreign property is generally income-earning property held outside Canada, other than personal-use property and property used in an active business. The test uses cost, not market value.

For taxation years or fiscal periods ending after 2026, the budget proposes to raise the filing threshold from $100,000 to $200,000 of cost. The ceiling for simplified reporting would also rise, from under $250,000 to under $500,000. Someone under the new filing threshold would not file the form. Someone between $200,000 and $500,000 of cost could use the shorter reporting method, if the CRA's administrative change proceeds as described.

A business-owner headline to read carefully

The proposed Canada Growth Incentive would let a Canadian-resident individual exempt capital gains on qualifying shares of a qualifying corporation, up to $15 million. That limit would apply separately to each qualifying individual, and separately to each business. It is not a second lifetime capital gains exemption for shares you already own.

The lifetime capital gains exemption remains the existing relief for qualified small business corporation shares. For 2026 that limit is $1,275,000. A Canada Growth Incentive claim on one corporation would limit the lifetime exemption on shares of that same corporation, and a lifetime exemption claim would limit the new incentive on that same corporation. A sale to an employee ownership trust or a worker cooperative could generally use both the existing employee-ownership exemption and this incentive, with one not reducing the other.

A qualifying individual must be at least 18 when the share is acquired, must not be a trust, and must be resident in Canada throughout the year the exemption is claimed. At a high level, a qualifying share would also have to meet all of the following:

A qualifying business is an active business other than the businesses the budget excludes:

• consulting services, and a professional practice of an accountant, lawyer, notary, physician, other health-care practitioner, engineer, or architect;
• any business whose principal asset is the reputation or skill of one or more employees;
• agriculture, fishing, forestry, mining, financial services, insurance, utilities, real estate, food and accommodation, arts, recreation, and entertainment;
• a business operating under a licensing or franchising agreement.

Alternative minimum tax can still apply. Gains exempted under this measure would be included at 30 percent for the alternative minimum tax, which is the same inclusion the budget describes for gains eligible for the lifetime capital gains exemption. Further integrity rules, including rules against multiplying the limit through several corporations that carry on the same business, are promised for a later release. The exemption is not something to assume on a term sheet until those rules, and the enacting legislation, are in front of you.

Frequently asked questions

Sources

• Tax Measures: Supplementary Information, Budget 2026, Department of Finance Canada. The filing date, instalments, caregiver credit, grocery supplement, T1135 threshold, and Canada Growth Incentive are set out in this annex.
• Chapter 6: A more efficient government, Budget 2026, for the May 15 deadline, the instalment changes, and the T1135 thresholds.
• Budget 2026 release, Department of Finance Canada, November 5, 2026.

Reviewed against the Budget 2026 tax measures annex on November 6, 2026. These measures were tabled with ways and means motions. They are not law until Parliament enacts them, and details can change. Confirm the enacted rules, and your own facts, before you rely on a date or an amount.