What the federal budget has in store for Canadian businesses, according to our experts

On Nov. 6, reporters Mark Rendell, Jason Kirby, Pippa Norman, James Bradshaw and Erica Alini answered reader questions on the new federal budget and what impact it will have on Canadian businesses and the economy.

Budget 2026: Ottawa bets spending boost will deliver future economic gains

Through tax cuts and other business supports, the budget aims to boost private-sector investment and major nation-building projects, including doubling the capacity of Canada’s energy grid.

It also included tens of billions of dollars for housing, First Nations infrastructure and other social supports, including a one-time top-up to the Canada Groceries and Essentials Benefit (CGEB).

Readers asked how the budget helps businesses, how Canada plans to manage its debt and what it means for personal investments. Here are some highlights from the Q&A.

The new budget

Why is the budget coming out in November instead of at the beginning of the fiscal year? What have the bureaucrats been using up to now to run the country?

Pippa Norman: The 2026 budget came out in November this year to follow the trend of Mr. Carney’s first budget, which was also released in November. Last year, it made sense seeing as he became Prime Minister in March.

In terms of what Ottawa has been using to run the country up until now, a lot of this is still detailed in the budget despite it coming so late in the fiscal year. Many of the funding amounts included in the 2026 fiscal plan have either been previously announced or are new large buckets of funding that will encompass smaller funding announcements already made.

For example, the Defence Drone Initiative received a $2.3-billion price tag through the 2026 fiscal plan. But this encompasses contracts worth up to $50M that have already been announced, just not necessarily paid out in full.

What’s the greater vision the Liberals are presenting with this budget?

Jason Kirby: The budget’s big theme is sovereignty, and like last year’s budget it is a response to the chaos and uncertainty wrought by the Trump administration. The budget document basically rests on three ideas: prudent spending, sparking a private investment supercycle and diversifying trade and technology. There’s plenty of debate over whether that adds up to greater sovereignty and control.

On the first point, the government said spending growth has dropped from more than 8% a year during the last decade to 2% and that it’s trimming the public service. That said the deficit remains large, at $62.3-billion and shrinking only to $52.9-billion in the coming years, despite a windfall of revenue from higher energy prices (ironically, thanks to Trump).

What immigration measures were announced in this federal budget?

Kirby: The budget itself didn’t have a lot to say about immigration, which itself was something. There had been a lot of speculation ahead of the budget whether the government would bow to pressure from some business groups to ease restrictions on temporary foreign workers.

Instead the government maintained the number of immigrants it admits to Canada over the next three years. It did announce it would transition up to 200,000 temporary residents to permanent resident status by the end of 2027 as it works to reduce a massive backlog of applications.

Canadians are in the dark about their wildfire risk

Is there sufficient funding in the budget for wildfire preparedness and other climate-related catastrophe preparedness?

Norman: There are a few wildfire mentions in this year’s budget. More specifically, the federal government is allocating up to $2.5-billion in financing to Alberta-based De Havilland to ramp up its waterbomber production to serve Canada and its allies. It’s also folding investments into growing and training its Armed Forces into the same envelope as improving national disaster preparedness. Beyond that, most of the lines about emergency preparedness are related to strengthening the resilience of First Nations communities with funding that was previously announced.

Does the budget show any indication that Carney intends to reach our 2035 defence spending target?

Norman: Budget 2026 provides a lot more detail than last year’s fiscal plan, in terms of how Canada is thinking of its defence spending targets as a per cent of GDP, to align with its NATO commitment. However, it also demonstrates that the federal government is capable of showing some restraint in terms of its defence spending boom.

As my colleague Steven Chase and I reported yesterday, even by 2030, Canada will still be roughly $37-billion short of the annual military-spending level needed to reach its commitment to bring core military spending to 3.5 per cent of GDP by 2035.

Prime Minister Mark Carney’s 2026 fiscal plan announced $11.2-billion in new defence spending over five years. Much different than the massive five-year $84-billion defence spending plan it unveiled in the 2025 budget.

Investing in businesses

How are we to attract private funds for infrastructure projects?

Mark Rendell: That’s the trillion dollar question, and it’s been a big theme of the Carney government over the past year. The most significant moves have come on the regulatory side with Bill C-39, which aims to implement Ottawa’s “one project, one decision, one year” promise. Essentially it’s a huge overhaul of Canada’s environmental review legislation with the aim of making it faster and less expensive for companies to get shovels in the ground.

There’s also the Major Projects Office, which is intended to act as a kind of concierge service for companies trying to execute large natural resource and infrastructure projects. The most significant measure in yesterday’s budget was the Productivity Mega Deduction, which allows companies to write off the cost of capital asset purchases up front – think mining equipment, bulldozers, even rail track. I wrote a big piece unpacking it a couple weeks back if you want to learn more.

No doubt, Ottawa is also taking a much more aggressive approach to industrial policy, putting public money into pipelines, mining projects, etc.

But the hope is that this, combined with the tax and regulatory changes, will crowd-in private sector investment.

What will the government do to reduce corporate and small business taxes so that they build appropriate incentives for founders and leadership teams to continue investing in our economy and to stay in Canada and grow their businesses?

James Bradshaw: The government did not go as far as some of the sweeping corporate tax changes that many businesses had called for – there’s no across-the-board reduction in the corporate tax rate, for example. But there are other measures squarely aimed at founders and entrepreneurs, and at reducing pain points in business taxes.

The Productivity Mega Deduction announced in September was the biggest item. The most significant new tax measure yesterday was probably the Canada Growth Incentive, which is really two measures:

One creates a new tax exemption on up to $15-million of capital gains from investments in Canadian businesses – a founder would now keep 96% of the value when they exit, compared with 71% before.

The other allows entrepreneurs to defer more taxes on capital gains when they roll over the proceeds from one company into another Canadian small business. That was was squarely aimed at matching the U.S., which already has a similar provision.

There were also a handful of simplification items aimed at reducing nuisances – allowing corporations to transfer losses to other subsidiaries within a corporate entity; making corporate tax elections easier; simplifying withholding taxes on the sale of Canadian assets by foreign investors; and so on.

One tax lawyer, John Tobin from Torys, told me the government signalled it’s “moving toward simplification,” but that there’s lots more it could do in future.

I’m a small business owner with a retail business in a tourist town. I have 12 employees and would like to figure out an exit plan so I can retire. Is there anything in the budget that would help support this?

Rendell: Check out the Canada Growth Incentive on p. 115. The new rule exempts taxes on capital gains of up to $15-million if you sell an eligible business. Sounds like it might be right up your alley, and definitely worth talking to an accountant about. The spring economic update also made permanent a measure that exempts capital gains it you sell your business to an employee ownership trust. Might be another way to exit if your employees are interested.

Opinion: A budget that ducks on debt and defence

Managing debt

In what world can you keep spending while our GDP is not growing and think this is great news for the country?

Kirby: It’s not in any way good news, though the government doesn’t say it is. What the government does argue is that relative to GDP, interest charges will reach about 2.2%, which is well below the 6.5% peak during Canada’s fiscal crisis in the 1990s. And Ottawa argues that the borrowing will spur investment, stating the budget’s measures “could” add about 0.2 percentage points a year to growth and leave the level of real GDP about 0.9 percent higher by 2030 than it otherwise would have been. Whether that payoff arrives is a forecast, though, not a certainty.

Will our debt hit $2 trillion?

Kirby: There are a few ways to measure debt. The federal debt, or accumulated deficits, is projected at $1.37-trillion this year and climbing to $1.59 trillion by 2030-31, so not within the budget’s five-year forecast. Net debt, a broader measure, is slated to reach $1.92-trillion five years from now, so that’s getting closer.

Whichever measure you use, it is likely that at some point in the future, Canada’s debt will reach $2-trillion, simply through the effects of inflation, let alone future deficits. But as Canada’s economy grows, the hope is that keeps the relative debt level in check. During the five-year forecast, debt-to-GDP is projected to remain around 40% – higher than it was last decade but lower than where it stood 20 years ago.

Personal finance

If in 2028 we no longer need to convert RRSP to RRIFs, will RRSPs become eligible for income splitting?

Erica Alini: The budget doesn’t mention income splitting, but Ottawa is speaking about merging the two accounts. In other words, the RRSP will at some point turn into something like the RRIF but without the need to convert the account. It seems that some of the key traits of the RRIF will remain, for example, the obligation to start making minimum withdrawals after age 71. I’m not sure about income splitting yet, but my colleague Meera Raman is looking into it for a story that should be up soon.

One note: There’s no mention of the changes coming into effect in 2028 in the budget. The government did not give a timeline for implementation.

From a new tax deadline to a revamped RRSP, six ways the budget could affect your wallet

I’d like to invest some funds into the Sovereign Wealth Fund on behalf of my grandchildren. What are the options and limitations?

Bradshaw: The option to invest in the Canada Strong Fund is expected to be available in 2027. They’ll be called Canada Strong Notes.

They are Principal Protected Notes, which means the principal amount you invest is guaranteed. You’d get interest payments regularly and a chance to earn a slice of the Fund’s profits, if its investments do well. It’ll likely be available in different durations – 5, 7 and 10 years, for example.

Downsides? We don’t know a lot about what interest rate it will pay, or whether you’ll have an option to withdraw money before the 5 or 10 years are over.

It will be offered through certain banks and financial institutions. So best to get some professional advice once it launches and we know all the details.

The tax system

The tax system has become far too complex. When will the federal government launch a new Royal Commission of Taxation that is designed to simplify the taxes?

Alini: There’s no grand plan for overhauling the tax system in the budget, but it does offer up a rather long list of small tweaks the government is hoping simplify tax paperwork for individuals and small businesses.

For example, they’ve proposed measures that would reduce the number of people who have to pay their taxes in installments and want to give taxpayers the option to claim a flat amount for a number of credits and deductions instead of itemizing expenses when the claims are small. The idea of merging the RRSP and RRIF also seems to be part of that effort to streamline and reduce paperwork.

Rendell: The Liberals did promise an expert review of the corporate tax system in their 2025 election platform. So far, they have not followed through. That said, this budget does include several measures aimed at simplifying the tax system. On the personal tax side, changes include: setting the tax filing due date to May 15; extending the timeline to file a notice of objection; increasing the threshold for filing a Foreign Income Verification statement from $100,000 to $200,000, etc. (You can see the list starting at p. 290 of the budget).

They also introduced some tweaks to business taxation to deal with nuisance issues, including: making it easier for companies to transfer losses between subsidiaries, changing certain tax rules for preferred shares, etc. (p. 294 of the budget). It definitely doesn’t add up to comprehensive tax reform. But when you combine it with the other tax measures aimed at spurring business investment – the Productivity Mega Deduction and the new Canada Growth Incentive – they are making some swings on taxes.