Managing Risk in Construction Projects: Financial Controls and Contract Best Practices

Executive Summary

Canada’s 2026 tax and regulatory landscape is going through structural change rather than the usual year-to-year adjustments. Three new measures set the tone: the Productivity Super-Deduction, the expanded Scientific Research and Experimental Development (SR&ED) incentives, and the first full year of the lowest federal marginal personal income tax rate. Together, they reward businesses that plan ahead and document well.

In this report, we highlight the interplay of three key policy directions that define the 2026 tax and regulatory landscape:

• Clearer signals for capital planning: Government measures give you a steadier view of ownership, sale, and reinvestment decisions. The proposed increase in the capital gains inclusion rate has been cancelled, and the federal small business tax rate remains at 9%.

• Expanded support for productivity investment: Evident in measures that improve the after-tax treatment of research activity and eligible capital investment. Expanded SR&ED rules, restored capital expenditure eligibility, and accelerated capital cost allowance measures improve the after-tax case for investing in equipment, technology, automation, and process improvements. The value depends on eligibility, documentation, taxable income, and when assets become available for use.

• Strict compliance with evidence-based reporting: Even with the Digital Services Tax (DST) repealed, the broader compliance direction remains data-intensive. New and evolving regimes in crypto-asset, forced labour and child labour supply chain reporting, and the Pillar Two global minimum tax rules point to a higher standard of evidence behind the positions you report.

The business priority in 2026 is to treat these changes as a single planning cycle rather than a series of separate updates, and to act while the timelines still leave room to plan.

At a Glance: 2025 v. 2026

Personal and corporate tax

Sources: Department of Finance Canada; Canada Revenue Agency

Payroll: CPP and EI

Sources: Canada Revenue Agency; Canada Employment Insurance Commission

Registered savings

Source: Canada Revenue Agency. Cumulative TFSA room reaches $109,000 in 2026 for those eligible since 2009.

SR&ED (under Bill C-15)

Source: Canada Revenue Agency; Bill C-15 (Budget Implementation Act, 2025, No. 1)

Carbon pricing

Source: Environment and Climate Change Canada. The $95 figure reflects the trajectory updated May 15, 2026.

Personal and Corporate Tax Rate Changes

Recent changes to Canada’s tax rules touch compensation planning, sale readiness, succession options, retained earnings, and corporate cash flow. Against this backdrop, we focus on five areas most relevant to Canadian business owners and their advisors: personal tax planning, capital gains and sale planning, the Lifetime Capital Gains Exemption (LCGE), the federal small business tax rate, and Employee Ownership Trust (EOT) rules.

Personal tax planning

On May 14, 2025, the federal government announced it would reduce the lowest federal marginal personal income tax rate from 15% to 14%, effective July 1, 2025. Because the measure took effect mid-year, the 2025 rate was prorated at 14.5%. For 2026 and later years, the first federal bracket is taxed at the full 14%.

The personal tax change is not only a household tax issue. The lower rate affects how you model salary, dividends, retirement contributions, and personal cash flow in line with your company’s needs.

The Department of Finance estimates savings of up to $420 per person and $840 per couple in 2026, with more than $27 billion in total savings over five years starting in 2025-2026. It’s worth reviewing whether your compensation and savings strategy still aligns with your income needs, your company’s cash position, and your longer-term wealth plan.

Capital gains and sale planning

The capital gains inclusion rate remains at 50% after the federal government cancelled a proposed increase. Budget 2024 had proposed raising the inclusion rate from one-half to two-thirds for corporations and trusts, and for individuals on annual capital gains above $250,000.

On January 31, 2025, the Department of Finance deferred implementation to January 1, 2026, and on March 21, 2025, the government announced that it would cancel the proposed increase altogether.

Capital gains treatment is central to sale planning because it drives after-tax proceeds. With the inclusion rate now holding at 50%, you can execute sale and succession planning without the risk of a higher future inclusion rate hanging over the timing. That restored predictability makes long-term decisions easier to commit to.

Lifetime capital gains exemption

The Lifetime Capital Gains Exemption (LCGE) is a key planning tool to weigh before you start a transaction. It can reduce taxable income for individuals who realize capital gains on the sale of qualified small business corporation shares, qualified farm property, or qualified fishing property. Because only half of capital gains are included in income, exempting $1 of an eligible gain through the LCGE removes $0.50 from taxable income under the current one-half inclusion rate.

Budget 2024 proposed increasing the LCGE to $1.25 million for eligible capital gains, effective for dispositions occurring on or after June 25, 2024, with indexation resuming in 2026. For 2026, tax reference materials list the indexed LCGE amount at $1.275 million for qualified small business corporation shares and qualified farm or fishing property.

The LCGE can materially affect the after-tax outcome of a sale, but eligibility is not automatic. If your corporation holds excess cash, passive investments, non-active assets, or has had ownership changes, review whether its shares meet the qualifying-property rules well before a transaction.

Small business tax rate

Canadian-controlled private corporations (CCPCs) that claim the Small Business Deduction (SBD) pay a 9% federal net tax rate, compared with the 15% general federal corporate rate. The reduced rate generally applies to up to $500,000 of qualifying active business income, subject to eligibility rules, associated-corporation rules, and business-limit reductions.

Provincial and territorial rates and business limits vary, so jurisdiction-specific review matters, especially if your business operates in more than one province or territory. The gap between the 9% federal small-business rate and the 15% general federal corporate rate affects retained earnings, reinvestment capacity, and cash flow planning.

If you’re near the $500,000 active business income limit, or you have associated corporations or passive investment income, access to the small business deduction is worth monitoring closely. If your company operates across provinces, you should account for provincial and territorial rate differences before making decisions about distributions, reinvestment, or expansion.

Employee ownership trust rules

Employee Ownership Trusts (EOTs) are a valuable succession-planning option for private business owners in 2026, particularly where a family transfer or third-party sale is not immediately on the table. The question is not only whether the exemption is available, but whether the transaction can be structured early enough to meet the technical requirements.

Budget 2023 proposed tax rules to support the creation and use of EOTs, and the 2023 Fall Economic Statement introduced a $10 million capital gains exemption for qualifying sales to an EOT. The exemption applies to the 2024, 2025, and 2026 tax years. The 2026 Spring Economic Update proposes to make the exemption permanent, but treat it as subject to implementing legislation until enacted. In the meantime, if you’re considering an EOT, assess valuation, financing, governance, employee participation, transition timing, and how it interacts with the LCGE well before the sale process begins.

Key takeaway: The 2026 rate environment rewards proactive structuring. Lower personal rates, a locked-in 50% inclusion rate, and an indexed LCGE give you a more stable base for compensation, sale, and succession decisions, but most of the benefits depend on planning the details early.

Payroll and Benefits Updates

Canada Pension Plan (CPP) and Employment Insurance (EI) contribution rates are largely stable in 2026, but higher earnings ceilings will raise the maximum contribution obligations for both employers and employees.

The following sections cover the CPP contribution thresholds, EI premiums and benefits, and the Tax-Free Savings Account (TFSA) and Registered Retirement Savings Plan (RRSP) limits.

Canada pension plan contribution thresholds

For 2026, the CPP contribution rate stays at 5.95% for employees and employers and 11.90% for self-employed individuals. The basic exemption amount remains $3,500.

The Year’s Maximum Pensionable Earnings (YMPE) has risen to $74,600, up from $71,300 in 2025. The Year’s Additional Maximum Pensionable Earnings (YAMPE), the second CPP earnings ceiling, has increased to $85,000, up from $81,200 in 2025. In 2026, pensionable earnings between $74,600 and $85,000 are subject to a second additional CPP contribution, known as CPP2. Employees and employers each contribute 4% of earnings in that range, and self-employed individuals contribute 8% of net business income between the first and second earnings ceilings.

For employers, the higher CPP ceilings mean payroll costs can rise for employees earning above the previous threshold, even though the contribution rate itself hasn’t changed. Build the higher YMPE and YAMPE into payroll forecasts, bonus planning, compensation modelling, and employee communications. Self-employed owners should factor the higher contribution ceilings into cash flow planning, since they pay both the employee and employer portions.

Employment insurance premiums and benefits

EI maximum insurable earnings rise in 2026 while premium rates ease slightly. The Maximum Insurable Earnings (MIE) is now $68,900, up from $65,700 in 2025. MIE is the income ceiling on which EI premiums are calculated, and it also sets the maximum weekly benefit rate. An employee earning more than $68,900 pays EI premiums only on the first $68,900 of insurable earnings.

Outside Quebec, the 2026 employee premium rate has decreased to $1.63 per $100 of insurable earnings, down from $1.64 in 2025. The maximum annual employee premium is $1,123.07, and the maximum employer premium is $1,572.30, since employers generally contribute 1.4 times the employee premium. In Quebec, where the province administers maternity, parental, and adoption benefits through the Quebec Parental Insurance Plan, the employee rate is lower at $1.30 per $100 of insurable earnings, with a maximum annual employee premium of $895.70.

For claims beginning on or after December 28, 2025, the maximum weekly EI benefit rate has increased to $729, up from $695, and the maximum weekly extended parental benefits have increased to $437, up from $417. Even though the rate outside Quebec dropped by a cent, the higher MIE means maximum annual premiums still rise. Employers should review payroll system settings, annual compensation forecasts, parental leave planning, illness-related absence policies, and workforce transition communications.

Registered savings and retirement planning limits

The 2026 TFSA contribution limit remains at $7,000. The cumulative contribution room reaches $109,000 for individuals who:

• Have been eligible since the TFSA began in 2009,
• Have been Canadian residents throughout,
• Were at least 18 years old in 2009, and
• Have never contributed.

TFSA contributions are not tax-deductible, but contributions, investment income, and withdrawals are generally tax-free. Excess TFSA contributions are taxed at 1% per month for as long as they remain in the account.

The 2026 RRSP dollar limit is $33,810, up from $32,490. RRSP contributions are generally deductible, and income earned in the plan is usually tax-deferred until amounts are withdrawn or received. The actual RRSP contribution room is generally based on 18% of the prior-year earned income, subject to the annual dollar limit, pension adjustments, and unused room. Excess contributions more than $2,000 above the deduction limit are generally taxed at 1% per month.

TFSA and RRSP limits aren’t employer payroll taxes, but they shape compensation design, executive planning, bonus timing, and employee financial wellness programs. Consider how salary, bonuses, retirement savings, and taxable benefits interact with available RRSP room, and use clear communication around the limits to support retention, financial wellness, and year-end compensation planning.

Key takeaway: The rates held steady, but the ceilings moved. Update your 2026 payroll forecasts to accommodate for the higher CPP and EI thresholds now, so withholding, employer costs, and bonus planning all reflect the new maximums.

Carbon Pricing and Energy Policy

Federal carbon pricing policy has shifted from a broad consumer fuel charge toward a more targeted industrial framework. Since April 1, 2025, the federal fuel charge rate has been set to zero for covered fuels and combustible waste. As a result, consumers no longer pay the federal fuel charge on gasoline, diesel, natural gas, and other covered fuels in provinces and territories where the federal backstop applied. The Canada Carbon Rebate, which returned fuel charge proceeds to eligible households, has been wound down, with final payments issued beginning April 22, 2025. The Canada Carbon Rebate for Small Businesses for the 2024-25 fuel charge year was also identified as the final payment to eligible businesses.

The focus now is on large emitters. Federal carbon pollution pricing standards continue to require industrial carbon pricing systems across Canada, and the Output-Based Pricing System (OBPS) remains in effect where it applies. As of May 15, 2026, the federal government updated the headline industrial carbon price trajectory after feedback from provinces, territories, industry, Indigenous leaders, and other stakeholders. The price is set at $95 per tonne of carbon dioxide equivalent emissions in 2026, rising to $130 by 2035, followed by a 1.5% annual inflationary escalator from 2036 until it reaches $140 in 2040.

Key takeaway: If you run industrial operations, the consumer fuel charge is gone, but your carbon costs are still rising on a long, now-extended schedule. Factor the trajectory into procurement, capital planning, and any pass-through pricing in your supply chain.

SR&ED Program Expansion

Bill C-15, the Budget Implementation Act, 2025, No. 1, is the legislative anchor for several productivity-focused tax measures from Budget 2025. The bill received Royal Assent on March 26, 2026, enacting enhancements to the SR&ED Tax Incentive Program, along with the immediate expensing and accelerated capital cost allowance measures that comprise the Productivity Super-Deduction. The SR&ED changes expand support for qualifying research and development (R&D), while the Productivity Super-Deduction improves the after-tax treatment of eligible capital investment. Both are part of a broader policy push to strengthen Canadian innovation by improving the after-tax case for research, capital investment, and productivity-enhancing projects.

What changed under Bill C-15

Bill C-15 expanded access to refundable R&D support under the SR&ED Tax Incentive Program. The enhanced 35% refundable SR&ED investment tax credit now applies to up to $6 million of qualifying expenditures, double the previous $3 million limit. For eligible corporations, this can increase the maximum refundable credit from $1.05 million to $2.1 million annually. The CRA states these measures apply to tax years that begin after December 15, 2024.

The changes also restore eligibility for SR&ED capital expenditures made after December 15, 2024, and extend the enhanced credit beyond qualifying CCPCs to eligible Canadian public corporations, subject to detailed eligibility and phase-out rules. If you previously left machinery, equipment, or other capital costs out of your SR&ED planning, it’s worth reassessing current and planned projects, reviewing eligibility before finalizing budgets, and keeping records that support technical uncertainty, experimentation, eligible costs, and equipment use.

How the new SR&ED limit can increase your refundable credits

Under the old $3 million SR&ED expenditure limit, a qualifying CCPC that spent $4 million on eligible current SR&ED expenditures could claim the enhanced 35% refundable ITC on the first $3 million. That could generate up to $1.05 million in refundable credits, while the remaining $1 million would generally qualify for the basic 15% ITC instead.

With the new $6 million limit, the full $4 million in eligible spending could qualify for the enhanced 35% refundable ITC, as long as your business meets the eligibility rules and the limit is not reduced. In that case, your refundable credit could increase to $1.4 million. If your business used the full $6 million limit, the maximum refundable ITC could reach $2.1 million.

For full details on the SR&ED changes, see our expanded SR&ED article.

The Productivity Super-Deduction

The Department of Finance describes the Productivity Super-Deduction as a set of enhanced tax incentives that let businesses immediately write off a larger share of new capital investment. Key measures include immediate expensing for certain productivity-enhancing assets acquired on or after April 16, 2024, and available for use before January 1, 2027. These include:

• Manufacturing and processing machinery and equipment
• Clean energy generation and energy conservation equipment
• Zero-emission vehicles

The reinstated Accelerated Investment Incentive is one component of the Productivity Super-Deduction. It applies to eligible property acquired on or after January 1, 2025, and available for use before 2030, with phase-out beginning in 2030.

Key takeaway: The expanded SR&ED limit and the Super-Deduction can meaningfully improve the after-tax case for capital projects, but timing and documentation drive the outcome. If capital costs were previously outside your SR&ED claims, revisit them before you finalize this year’s budgets.

Provincial Considerations

As a qualifying CCPC, you can claim the SBD to reduce your federal net tax rate to 9% on your first $500,000 of active business income. However, you should keep in mind that provincial or territorial corporate tax is paid on top of the federal tax. Every province sets its own corporate income tax (CIT) rate and income thresholds.

Provincial small business rates

Since last year, several provinces have introduced tax rate cuts to help CCPCs stay more competitive and resilient.

Nova Scotia & Prince Edward Island: On April 1, 2025, Nova Scotia reduced its small business CIT rate from 2.5% to 1.5% and increased the income threshold from $500,000 to $700,000. It was followed by Prince Edward Island, which implemented a 1% small business CIT rate and raised the threshold to $600,000, up from $500,000, effective July 1, 2025.

These two Atlantic Provinces are considered the first movers in CIT adjustments, according to the Canadian Federation of Independent Business. Earlier this year, Newfoundland and Labrador also lowered its small-business CIT rate to 2%, with further reductions to 1.5% in 2027 and 1% in 2028.

Quebec: Meanwhile, the small business CIT rate in Quebec has been reduced from 3.2% to 2.2% for taxation years beginning after April 29, 2026. Eligibility still depends on Quebec’s small business deduction rules, including the minimum paid-hour threshold. Businesses generally need at least 5,500 remunerated hours to qualify in full. A linear reduction applies below 5,500 hours, and the benefit is removed completely at 5,000 hours or fewer.

Ontario: Starting July 1, 2026,  Ontario will soon follow suit by reducing its small business CIT rate from 3.2% to 2.2%. According to the Ontario government, the 31.25% rate cut is expected to provide up to $5,000 in annual tax relief to more than 375,000 small businesses.

Manitoba and Yukon: Both provinces continue to maintain a 0% provincial small business CIT rate.

Sources: Government of Ontario 2026 Budget; the Canada Revenue Agency corporation tax rates page; and the corresponding 2025 and 2026 provincial budgets for Quebec, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island.

Provincial carbon systems

The federal OBPS currently serves as the backstop industrial carbon pricing system in Prince Edward Island, Manitoba, Yukon, and Nunavut. Covered industrial facilities must provide compensation for emissions that exceed their annual emissions limit.

Most other provinces administer their own industrial carbon pricing systems. In 2013, Quebec established a cap-and-trade system, commonly known as the “carbon market.” The system was linked with California’s in 2014, creating the largest carbon market in North America. It covers industrial facilities emitting 25,000 tonnes of CO2e or more annually, as well as fuel distributors and certain electricity producers or importers. The latest Quebec-California auction, held on May 20, 2026, cleared current vintage units at $39.63 per tonne.

The industrial carbon tax rate under the OBPS was put on hold in Saskatchewan on April 1, 2025. This move removes the carbon tax rider from SaskPower bills, with estimated annual savings of about $112 for the average residential customer and $330 for farms.

Meanwhile, Alberta regulates large industrial emitters through the Technology Innovation and Emissions Reduction (TIER) system. It covers facilities that emit 100,000 tonnes of CO2e or more annually, with compliance obligations based on facility benchmarks.

The system matters because Alberta is Canada’s main energy-producing province, with 97% of the country’s known crude oil reserves and about 61% of its natural gas production. TIER covers approximately 60% of Alberta’s provincial emissions, making it central to Canada’s industrial decarbonization strategy.

The May 15, 2026, Canada-Alberta Implementation Agreement sets the province’s headline industrial carbon price at $95 per tonne in 2026, which will increase to $115 by 2030.

Sources: Environment and Climate Change Canada; the Implementation Agreement for the Canada-Alberta Memorandum of Understanding (Government of Canada).

Key takeaways: The federal small business rate stays at 9%, but provincial rates can still affect your overall tax reduction rate. If you operate in multiple provinces or territories, keep an eye on where income is earned, which thresholds apply, and whether you still qualify for provincial small business treatment. It’s also smart to factor carbon pricing into your planning, especially if you’re in energy, manufacturing, transportation, agriculture, or other emissions-intensive industries.

New Reporting and Compliance Regimes

Canada’s reporting environment is moving toward a higher standard of transparency. The core issue extends beyond filing a report. The data behind your tax positions, digital-asset activities, supply chain claims, sustainability disclosures, and cross-border structures need to withstand scrutiny.

We outline the key developments based on their likely impact zones:

1. Digital reporting obligations
2. Supply chain and sustainability accountability
3. Cross-border tax strategies.

Across all three, one requirement keeps surfacing: better data quality, fuller documentation, and stronger internal controls.

Crypto-asset reporting and digital tax

Canada’s digital-tax landscape is moving in two directions at once. The Digital Services Tax (DST) has been repealed, removing one high-profile tax exposure for large digital platforms, while crypto-asset reporting is moving toward more detailed data collection and cross-border tax information exchange.

The Crypto-Asset Reporting Framework (CARF), developed by the Organization for Economic Co-operation and Development (OECD), supports the automatic exchange of tax information on crypto-asset transactions. Budget 2024 targeted the first domestic reporting and exchanges in 2027 for information relating to the 2026 calendar year, and later federal materials identify a deferred CARF application date of January 1, 2027. Affected providers may include exchanges, brokers, dealers, crypto-asset automated teller machine (ATM) operators, and some wallet or platform operators carrying on business in Canada. If that’s you, prepare for customer due diligence, tax residency collection, taxpayer identification reporting, transaction tracking, data governance, and cross-border information sharing.

The DST has moved in the opposite direction. Originally a 3% tax on certain Canadian-source digital services revenue earned by large domestic and foreign businesses, it was rescinded in 2025 and then officially repealed through Bill C-15 on March 26, 2026, retroactive to its original June 20, 2024, effective date. The CRA is required to issue full refunds for DST payments already received, including overpayment interest to affected platforms.

Supply chain and sustainability accountability

Canada’s supply chain due diligence legislation, the Fighting Against Forced Labour and Child Labour in Supply Chains Act, came into force on January 1, 2024. Covered entities must file an annual report on or before May 31 each year, describing the steps taken during the previous financial year to reduce forced labour and child labour risks in their activities and supply chains.

Private-sector entities are generally covered if they’re listed on a Canadian stock exchange or if they have a place of business in Canada, do business in Canada, or have assets in Canada and meet at least two of three thresholds:

• $20 million in assets
• $40 million in revenue
• An average of 250 employees.

Separately, the Canadian Sustainability Standards Board (CSSB) issued Canadian Sustainability Disclosure Standards (CSDS) 1 and 2 in December 2024, with voluntary adoption for annual reporting periods beginning on or after January 1, 2025. For the full picture on sustainability disclosure, see our ESG reporting article.

Cross-border tax exposure

Canada’s Global Minimum Tax Act received Royal Assent on June 20, 2024, implementing key elements of the OECD and Group of 20 (G20) Pillar Two framework. The rules generally apply to multinational enterprise groups with annual consolidated revenue of at least 750 million euros and are designed to establish a minimum effective tax rate of at least 15% in each jurisdiction. If your group claims SR&ED investment tax credits, plan that incentive alongside your exposure to the Qualified Domestic Minimum Top-Up Tax (QDMTT).

Key takeaway: The common thread across crypto reporting, supplier due diligence, sustainability disclosure, and cross-border tax is data discipline. Stronger records, controls, and evidence are what will carry you through audits, investor scrutiny, and the reporting demands still taking shape.

What Canadian Business Owners Should Do Now

The 2026 reforms give you time to plan, but early action matters. These insights show where the changes affect payroll, compensation, investment, tax credits, reporting, and governance.

• Update your payroll and benefits forecasts: Reflect the lower first federal personal income tax bracket (14% on taxable income up to $58,523) and the higher payroll ceilings, including the 2026 EI Maximum Insurable Earnings of $68,900. These flow through to withholding, employer payroll costs, employee deductions, benefits communications, bonus planning, and workforce cost projections.
• Reassess your SR&ED and capital investment plans: Revisit your SR&ED strategy under the expanded rules, which raise the expenditure limit, restore capital expenditure eligibility, and extend access to eligible Canadian public corporations. If you previously excluded machinery, equipment, or other capital costs from SR&ED planning, reassess current and planned projects, especially if your business is investing in equipment, automation, technology adoption, product development, process improvement, or other research and development activities.
• Review your reporting and compliance exposure: Assess where you stand on CARF, forced labour and child labour supply chain reporting requirements, and CSDS. Even where adoption is delayed or voluntary, the direction is clear: your business needs stronger data, better documentation, and more defensible reporting across tax, supply chain, sustainability, and cross-border activity. This is a practical step toward preparing for Canadian regulatory changes in 2026.
• Model your salary and dividend planning: The lower personal tax rate may shift the salary-versus-dividend balance, but the answer isn’t automatic. Salary creates CPP contributions and RRSP room, while dividends can reduce payroll exposure and preserve flexibility. The right mix depends on cash flow, retirement planning, corporate income, provincial tax rates, and the owner’s long-term extraction strategy. The CRA guidance confirms RRSP room is tied to earned income and annual limits, which is why salary and dividends should be modelled together rather than reviewed in isolation.
• Build a proactive planning roadmap: Work with a qualified advisor to build a proactive roadmap for tax, payroll, SR&ED claims, reporting systems, and governance. The goal isn’t just to comply with new rules, but to align your planning decisions with where the business is headed.

Final Thoughts: Turn Tax and Regulatory Reforms into a Planning Advantage

The 2026 reform cycle presents a practical planning opportunity. Lower personal tax rates and updated registered savings limits may give business owners more flexibility, and greater certainty around capital gains gives entrepreneurs and family-owned businesses a stronger footing for succession, sale, and reinvestment planning.

These opportunities come with higher expectations. New and evolving reporting requirements across crypto-assets, supply chains, sustainability, and cross-border tax will call for stronger data, documentation, and governance.

The takeaway is to approach 2026 as a strategic planning year. Review your tax structures, compensation models, investment timing, reporting systems, and compliance readiness while there’s still room to make informed planning decisions.

Frequently Asked Questions

1. What is the lowest federal personal income tax rate for 2026?

For 2026 and later years, the first federal personal income tax bracket is taxed at 14%. This follows the mid-year reduction in 2025, in which the rate was prorated to 14.5%.

2. Did the capital gains inclusion rate increase go ahead?

No. The federal proposal to increase the capital gains inclusion rate was cancelled, so the inclusion rate remains at 50%.

3. What is the SR&ED expenditure limit for 2026?

Bill C-15 doubled the enhanced refundable SR&ED expenditure limit from $3 million to $6 million. For eligible corporations, this can increase the maximum annual refundable credit from $1.05 million to $2.1 million.

4. Is the Digital Services Tax still in effect?

No. The Digital Services Tax (DST) was rescinded in 2025 and officially repealed through Bill C-15 on March 26, 2026. The repeal is retroactive to the original June 20, 2024, effective date.

5. What are the CPP and EI maximums for 2026?

For 2026, the CPP first earnings ceiling is $74,600, and the second earnings ceiling is $85,000. The EI maximum insurable earnings amount is $68,900, while the maximum weekly EI benefit is $729, and the maximum weekly extended parental benefit is $437.

6. What are the TFSA and RRSP contribution limits for 2026?

The 2026 TFSA contribution limit remains at $7,000, while the RRSP annual dollar limit has increased to $33,810, up from $32,490 in 2025.

7. Does my business need to file a forced labour and child labour supply chain report?

Not every business is covered. Under the Fighting Against Forced Labour and Child Labour in Supply Chains Act, private-sector entities are generally covered if they are listed on a Canadian stock exchange, or if they have a place of business, do business, or have assets in Canada and meet at least two of three thresholds: $20 million in assets, $40 million in revenue, and an average of 250 employees.

8. Does the new global minimum tax apply to my business?

The global minimum tax rules generally apply to multinational enterprise groups with annual consolidated revenue of at least 750 million euros. Most small and medium-sized businesses will not be directly covered, but larger groups should assess how the rules interact with tax credits, including SR&ED incentives.

9. When does crypto-asset reporting under CARF start?
   The Crypto-Asset Reporting Framework (CARF) is expected to take effect on January 1, 2027.