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Budget 2026 — unveiled Thursday — contains many tweaks to the personal and corporate tax system. Unlike previous years, I refrained from posting initial comments in the hour after release. Over the years and decades, Canadian governments have tended to make the federal budget an event normally held in the first few months of the new year, so I found this particular budget snuck up on me, and perhaps on you!
Not being in Ottawa for the lockup, it’s no simple quick read. You can find out yourself by downloading the more than 500 pages here. Pretty overwhelming, so it’s no surprise that the Globe & Mail’s Andrew Coyne cynically summed it up thusly (hyperlinked headline for subscribers): “A strange budget, as opaque as it is complacent.”
“I give up,” Coyne quipped, saying federal budgets have “become utterly incoherent, wandering, purposeless and, frankly, impossible to understand.” He laments the reality that “with federal debt at about 40 per cent of GDP, and provincial government debts adding up to about 30 per cent of GDP, total net public debt is now in excess of 70 per cent of GDP.”
Other than that, I’m not going to reprise the mass media’s major points on the exploding Debt and rises in Defence spending. What follows is what captured my own attention as an investor and semi-retiree, not to mention someone whose daughter is finally dipping her toes into the costly Toronto housing market.
I found the highlighted RBC Wealth Management’s key takeaways mercifully succinct. Thus, it says there are “no proposed changes to the general personal or corporate income tax rates” but a number of proposals to simplify the Canadian tax system. I can’t help but reflect that the very phrase “simplify the Canadian tax system” is the ultimate oxymoron!
Later annual Tax Filing deadline
Extending the annual tax filing deadline from the traditional April 30th to May 15th will no doubt be welcome for procrastinators, although if enacted it would not apply until the 2027 Tax Year (i.e. May 2028). Our family typically tries to escape winter in January and much of February, so if that measure takes hold, we will welcome the eventual filing respite. The measure would also apply to the self-employed.
RRSP for Life
I’m still scratching my head about the concept of an “RRSP for life,” well explained in this Investment Executive article: Budget proposes RRSP for life, eliminating need to convert to RRIF. Minimum withdrawal requirements wouldn’t be affected and would still begin at age 71, it said. It “also plans to simplify transfers to a surviving spouse by allowing them to be named a successor holder for an RRSP, as is currently allowed for successor annuitants in RRIFs and TFSAs. This could permit the RRSP to remain open until the death of the surviving spouse.” IE quotes CIBC Wealth’s Tax guru Jamie Golombek to the effect the proposal is “a novel approach … It sounds like they want to get rid of the whole RRIF concept altogether, and just have the RRSP, and the RRSP goes on forever until death or until the last to die, if you have a spouse or common-law partner.”
However, the changes necessary to implement all this could mean it will take a few years to get it in place, Golombek warned.
The article also describes pre-budget recommendations for Ottawa to raise the RRSP-to-RRIF conversion age from the current 71 to 74 or 75.
Doug Carroll, tax and estate specialist at Aviso Wealth, points out in this G&M article that the RRSP for Life reform “would not change the obligation to make those minimum withdrawals after age 71. Instead, it would simply spare Canadians the paperwork and hassle of converting their account.”
Higher Foreign Content limits on T1135 form
One measure I didn’t see emphasized in the initial wave of publicity was about Form T1135, the Foreign Income Verification Statement. Up until now, Canadian residents, corporations, trusts and certain partnerships had to file this form above a threshold of $100,000 in specified foreign property held in taxable (non-registered) investment accounts. Budget 2026 proposes to double this threshold to $200,000, which any investor in (mostly) US securities would surely welcome. According to RBC, the CRA “would also increase the threshold for simplified reporting from less than $250,000 to less than $500,000.”
As I understand the current rules, the existing $100,000 threshold applies to foreign securities (like US stocks and ETFs) held in taxable accounts and is defined as the initial cost, not current market value. For couples it’s $100K per spouse. Because it is a laborious process to track and report, I’ve always been careful to stay well below this threshold. If and when the measure is official, it would be nice to be able to add to non-registered foreign investments. But I’ll believe it when I see it.
Affordability Measures
As expected, Budget 2026 proposes several measures aimed at mitigating the high cost of daily living, particularly for young families. Thus, Ottawa is proposing a one-time supplement to the Canada Groceries and Essentials Benefit, which helps lower the GST for low-income taxpayers. As noted in the same G&M overview, the one-time supplement to the benefit would be equal to half the amount that beneficiaries are eligible for in the current benefit year, which runs until the end of June 2027. To be delivered as a one-time payment early next year, the supplement would be up to $223 per adult and $117 per child, with a $117 top-up for single adults. It added that Ottawa has “already delivered a one-time 50-per-cent benefit supplement in June, followed by a 25-per-cent increase to the regular, quarterly benefit payments that is set to last until 2031.”
The budget also proposes minor tweaks to existing credits, such as turning the Canada Caregiver Credit for Canadians who look after adults with disabilities into a refundable tax credit. For caregivers whose incomes are too low to pay tax, eligible Canadians could receive up to $1,260 for 2027.
Also proposed is lowering eligibility thresholds and boosting payments for the Canada Workers Benefit, which helps low-income Canadians who have some earnings from work. The benefit would be renamed the Build Canada Workers Benefit, increasing the maximum a single individual can receive from $1,709 to $1,859 a year. Families could receive up to $3,143 annually, an increase from $2,943.
Readers brave enough to wade through the full 500-page Budget itself are welcome to append as comments any important proposals that I or the media at large have not yet drawn our attention to. But after an eventful week that included the Blue Tsunami of a Democrat sweep of the US midterm elections and the resulting surge and crash of the AI stocks, I doubt too many Canadians will be spending the weekend perusing the full Budget documents.
