What You Need to Know About the 2026 Federal Budget

On November 5, 2026, Minister of Finance and National Revenue François-Philippe Champagne released Masters of Our Destiny: Budget 2026.

For businesses, the headline measure is the new Productivity Mega Deduction, a permanent tax incentive that allows companies to immediately write off most new capital investments. Combined with new incentives for entrepreneurs, innovation, major projects, and housing construction, the budget codifies significant policy actions to drive investment.

At the same time, the government continues to run significant deficits and the fiscal capacity of the federal government is being used up. Budget 2026 projects deficits remaining above $50 billion annually over the forecast horizon and a significant increase in net debt over the forecast.

Below, we provide a high-level overview of how Budget 2026 will impact the business community in Vancouver and the British Columbian economy:

Fiscal Forecast

Key Business Measures

• Budget 2026 makes the Productivity Mega Deduction permanent, making it simpler and more attractive for businesses to invest by allowing immediate expensing for most capital investments. This would allow for eligible investments to be fully written off against taxable income in the year that they become available for use, instead of being depreciated over time.
  • This deduction means Canada’s marginal effective tax rate on new business investment will fall from 13% to 6.4%, while also giving Canada the lowest tax rate on new business investment of any major economy in the world.

Canada Growth Incentive

• Budget 2026 introduces a new tax exemption on up to $15 million in capital gains earned from eligible investments in Canadian companies.
• This incentive also enhances the small business rollover to allow increased deferral of taxes on capital gains when proceeds are reinvested in another Canadian small business.

Canada Strong Fund

• Budget 2026 announces the government’s intention to bring forward legislation in the coming months to establish the Canada Strong Fund as an arm’s-length and standalone Crown corporation.

Innovation & AI

• The new budget provides $930 million to expand the SR&ED program.
• Budget 2026 enables Canadian AI companies to access 500 MW of sovereign AI compute through new financial tools to mobilise private capital and expand compute capacity.
• Amending the Patent Act to require changes in patent ownership to be registered with the Canadian Intellectual Property Office. 

Tax measures

• Budget 2026 proposes changes to filing and administration, including moving the tax filing date for all Canadians, including the self-employed, from April 30 to May 15, extending the window to file a notice of objection with the CRA from 90 days to one year, and raising the personal and corporate income tax instalment thresholds.

• Budget 2026 will extend eligibility for both the Mining Exploration Tax Credit and the Critical Mineral Exploration Tax Credit for five years and also proposes to allow helium exploration and development expenses to qualify as Canadian exploration expenses or Canadian development expense, consistent with the treatment of similar expenses in the petroleum and natural gas sector.
• Budget 2026 proposes to expand recently announced exemptions to Canada’s Excessive Interest and Financing Expenses Limitation (EIFEL) rules, making it easier for businesses to deduct interest costs related to investments in purpose-build rental housing and regulated energy utility projects.

• The budget is merging tax rules governing both RRSPs and RRIFs, removing the requirement to convert and creating “RRSPs for life”.

Trade, Infrastructure & Major Projects

• $170 million in 2027-28 through the Workforce Tariff Response.
• $55.3 million over two years on a cash basis, starting in 2026-27, to Transport Canada to advance digital trade processes.
• The budget provides $193 million over four years and $43 million ongoing to strengthen and stabilise critical border technology infrastructure.
• Budget 2026 is investing to expand Invest in Canada to add specialized financial sector expertise to establish its presence in key global markets.
• Public consultations on potential legislative and regulatory changes to strengthen trade remedy system and make it more efficient.
• On trade finance, Budget 2026 proposes merger of the activities of the Business Development Bank of Canada and Export Development Canada.

Major Projects

• Budget 2026 proposes to provide $187.4 million over five years, beginning in 2026-27, and $24.2 million in future years to launch and operate a major projects management entity.
• The new budget highlights Roberts Bank Terminal 2’s designation as a project of national interest under the Building Canada Act. Many other B.C. projects are listed as well.

Airport

• As expected, Budget 2026 addressed the government’s plan to move towards the privatization of airports in Canada, including YVR. Their plan states the first airport will transition by 2029, while also promising rules to be implemented to limit increases in airport fees.

Canada Infrastructure Bank

• Moving the Canada Infrastructure Bank (CIB) to the Minister of Finance and consolidating the Indigenous Loan Guarantee Program within the CIB.

Housing

• Budget 2026 is making changes to how foreign buyers can engage with the Canadian real estate market, stating that foreign buyers will be allowed to purchase newly constructed homes and pre-sale/new build developments to help stimulate housing construction and support developers facing a slowdown in project financing.

Budget 2026 proposes to provide nearly $45 billion on a cash basis as a next step in a housing strategy that is anchored by three pillars. Of that, the budget proposes:

Build Canada Homes

• An additional $13 billion over ten years to recapitalize Build Canada Homes and largely increase non-market housing construction across Canada, starting in 2028-29.

Accelerating housing initiatives

• Budget 2026 proposes $100 million over three years for a partnership with the Federation of Canadian Municipalities to support municipal digital permitting systems, promote the adoption of AI in permitting processes, and support faster development approvals.
• The budget provides targeted investments towards the adoption for modern methods of construction of homes.

Homelessness

• A 10-year plan to end homelessness with $11.2 billion in new funding over the next four years, plus $17.8 billion in future years.

Talent & Labour

• Budget 2026 announced the 2027-2029 Immigration Levels Plan. The Plan holds steady from last year, with targets broadly remaining flat. In each year of 2027-2029, Canada will allow 370,000 new temporary resident arrivals and 380,000 permanent resident admissions.
• A one-time measure that could move up to 200,000 people already in Canada to permanent residence by the end of 2027.

Workforce Development

• The government is reforming the Temporary Foreign Worker Program by investing $151.5 million over five years to improve service delivery in Budget 2026. On the same day, ESDC announced they will be extending Low-Wage Stream LMIA validity from one year to two years, giving provinces and territories a greater role in identifying labour shortages in certain regions, increasing workforce caps for eligible employers from 10% to 15%, and investing an additional $82 million over four years to strengthen migrant worker supports.
• Budget 2026 also announces a new Partnerships for Indigenous Workforce Readiness Fund, investing over $450 million over four years beginning next year.

Other Highlights

• The new budget commits to renew the Canadian Critical Minerals Strategy with $424 million of funding over four years.

Clean Energy

• Budget 2026 is investing over $50 million in measures to expand Canada’s electricity system and support investment in clean technology by extending the Clean Technology and Clean Electricity Investment tax credits to the end of 2040, while also expanding eligibilities.
• Other investments in this sector include $4 billion to support electricity infrastructure expansion, renewable energy, and priority electricity sector projects across Canada.
• An emphasis to provide energy reliability in the North is found in this budget, with a call out to replace and upgrade aging electricity infrastructure such as Mayo Hydro Facility and Atlin Hydro Expansion projects.
• Allocate $1 billion over six years, starting in 2028-29, to the Strategic Response Fund to support large-scale research and development and innovation projects.
• Propose the renewal of the Industrial Research Assistance Program Clean Technology initiative.
• Budget 2026 aims to build off the 2026 Nuclear Strategy by providing $518.5 million over five years to advance the nuclear energy industry.

Forestry

• The budget also announces $6.5 billion over six years to Canada’s forestry sector. This includes $4 billion for a new “forestry sector accelerator” to invest in large facilities and transform existing ones into biorefineries, biofuel facilities and other projects.
• Budget 2026 announces the Tla'amin Nation's acquisition of the Stillwater Forest Operation in British Columbia, creating long-term forestry and economic opportunities.

Defence

• Building on the Defence Industrial Strategy, Budget 2026 will direct up to $2.7 billion over five years, starting in 2026-27, on a cash basis, from previously announced funding to support growing Canada’s defence sector.

Wine Industry

• Budget 2026 proposes to provide $176.9 million over three years, starting in 2027-28, to Agriculture and Agri-Food Canada to renew the Wine Sector Support Program.

Budget 2026 is growth and investment-oriented. It is meant to be a signal to the world that Canada is open for business. The strongest measures focus on encouraging business investment and supporting innovation in-house for the years to come. For British Columbia, the momentum is felt. This budget comes with six B.C. projects on the federal major projects list, significant investments to strengthen the provincial economy, and a clear focus on supporting private-sector growth.

At the same time, businesses continue to face pressures from tariffs, costs, and economic headwinds. The budget favours investment rather providing relief or affordability for small businesses. The effectiveness of the new measures will depend on timely access and whether businesses across a broad range of sectors, including smaller firms, feel the rising tide of the new wave of investment. We also note the fiscal trajectory is becoming more concerning. The trajectory, coupled with additional loan and financial mechanisms, means additional risks to the federal government’s finances on an ongoing basis. The long-term success of the budget will depend on whether these investments generate the productivity and economic growth needed to strengthen Canada's fiscal position over time.