Blog · Tax · Budget 2026 · November 2026
The 2026 federal budget, tabled on November 5, leaves corporate tax rates alone, including the small business rate. For owner-managers, the changes worth acting on now are a full write-off for most equipment purchases, a new rule for family trusts, and a new capital gains exemption for start-ups.
This post is part of our Budget 2026 Insights series. Everything here is proposed, not yet law, and the details could change.
Most equipment and other business assets bought on or after September 15, 2026 could be written off 100% in the year they are put into use, with no dollar cap. This is the Productivity Mega Deduction, announced in September and confirmed in the budget. It is permanent, not a temporary incentive. Most purchases qualify, but not all: the budget estimates that eligible assets make up more than 65% of business investment.
The write-off is claimed in the year the asset is available for use, not the year you order or pay for it. If you are planning a purchase near your year-end, the date it is delivered and ready to use can decide which year gets the deduction.
Buildings, goodwill and other intangibles are excluded, as are some vehicles. So is used equipment you previously owned or bought from a related party. A corporation can use the write-off to create a loss, but a sole proprietor or a partnership of individuals can only use it to bring income down to zero.
One caution: a full write-off now can mean a bigger tax bill if you sell the asset later. If you have significant purchases planned, let's look at the timing together.
Family trusts: from November 5, 2026, a trust could no longer distribute property tax-deferred to a corporation or partnership with any non-resident owner, directly or indirectly. There is no minimum, so one share held by a family member living abroad would be enough. The trust would instead be taxed as if it had sold the property at fair market value. If your trust has a corporate beneficiary, especially as it approaches its 21-year anniversary, check with us before any distribution.
Estate freezes: dividends paid by private companies on preferred shares would no longer attract a special corporate tax that could catch some freeze structures. This applies to dividends paid from November 5, 2026, and removes a trap in some existing freeze and preferred share structures.
The budget's headline measure is a new exemption on up to $15 million of capital gains, per person, per qualifying business, for shares issued from November 5, 2026. It is a real opportunity for the right founder, but most existing owner-managers are unlikely to benefit soon.
The value is significant. The budget estimates that a founder with a $15 million gain would keep nearly 96% of the value on exit, compared with 71% before Budget 2026.
It only works on a sale of shares. Many buyers prefer to buy a company's assets instead, so how a sale is structured becomes a much bigger negotiation when this exemption is at stake.
The detailed rules, including anti-avoidance rules, have not been released yet. If you already own a business, don't reorganize just to qualify: whether a freeze or similar reorganization could create new qualifying shares won't be clear until the legislation is out. If you are starting a new venture, talk to us before you incorporate so this option stays open.
Corporate instalments (2028): a corporation would only need to pay instalments if its federal tax for the year is more than $7,500, up from $3,000. This applies to taxation years beginning on or after January 1, 2028.
Individual pension plans (2028): if your company sponsors an IPP, new rules are coming. From January 2028, IPPs would be subject to the same investment rules as RRSPs, and a plan whose assets exceed 200% of its pension liabilities could lose its registration. If you have an IPP, let's review it well before then.
Corporate elections (once the legislation passes): corporations would no longer need to file a certified copy of a directors' resolution with certain elections, including capital dividend elections (Form T2054). This applies to elections made from Royal Assent. The penalty for a late capital dividend election is not changing.
Corporate groups (under consultation): the government is consulting on letting a parent company and its wholly owned subsidiaries share current-year losses. Sister companies owned directly by individuals would not be covered. Until then, amalgamations and other existing strategies remain the way to use losses within a group.
For the deadline, objection and penalty changes that affect every business, see the other posts in our Budget 2026 Insights series.
Michael Sadovnick, CPA
This post is general information based on the 2026 federal budget proposals, which may change before becoming law. It is not tax advice for your situation. Please contact us before acting.