Blog · Tax · Budget 2026 · Cross-border · November 2026
The 2026 federal budget, tabled on November 5, has no headline measure aimed at cross-border taxpayers. But several changes land differently if you are a US citizen living in Canada, have family abroad, or own Canadian property from outside the country.
The short version: Canadian deadlines and thresholds are moving, but your US filing obligations are not. Some Canadian benefits, like the new capital gains exemption, may not carry over to your US return.
This post is part of our Budget 2026 Insights series. Everything here is proposed, not yet law, and the details could change.
Starting with 2027 returns (filed in 2028), every Canadian individual would file and pay by May 15. Self-employed individuals and their spouses would lose their June 15 filing date. Your 2026 return is not affected.
For US citizens living in Canada, the US return is usually finished after the Canadian one, because the US return relies on Canadian tax paid to claim foreign tax credits. US citizens abroad generally get an automatic extension to June 15 to file.
Today, a self-employed US citizen can file both returns by June 15. From 2028, the Canadian return would be due a month earlier. If you are self-employed, plan to get your records to us earlier.
Instalments change in 2028 too. In Canada, you would only need instalments if you owe more than $7,500, and individuals earning mainly business income could make one payment by December 31. US estimated tax payments are not affected and stay quarterly.
Canadian residents file Form T1135 when the total cost of their foreign investments passes $100,000. That includes a US brokerage account, US shares held directly, or a US rental property. A vacation home used personally does not count.
The budget would raise the threshold to $200,000, and the simplified version of the form would be available up to $500,000, up from $250,000. This starts with tax years ending after 2026, so for individuals it begins with 2027 returns.
If you are a US citizen, this changes nothing on the US side. Your Canadian accounts are still reported to the US on the FBAR and, above its own thresholds, on Form 8938.
This one already applies. For distributions on or after November 5, 2026, a trust could no longer pass property tax-deferred to a corporation or partnership with any non-resident owner, directly or indirectly. There is no minimum ownership level.
This matters for families where a child or grandchild has moved to the US or elsewhere and holds shares in a family holding company that is a beneficiary of the trust. If the trust distributes to that company, the trust could be taxed as if it had sold the property at fair market value.
The risk is highest for trusts approaching their 21-year anniversary, when distributions are common. If anyone connected to your trust's corporate beneficiaries now lives outside Canada, talk to us before any distribution.
When a non-resident sells Canadian real estate or certain other Canadian property, the buyer must hold back part of the price unless CRA issues a clearance certificate. The budget makes three changes, for sales on or after January 1, 2027.
| Today | Proposed | |
|---|---|---|
| Holdback, most capital property | 25% of the price | 15%, for non-resident corporations only |
| Holdback, depreciable property such as a rental building | 50% of the price | 30%, for non-resident corporations only |
| Tax-deferred transfer to a corporation (section 85) | Holdback still applies until CRA clears it | No holdback if the election and a notice to CRA are filed within 30 days |
The lower rates apply only to corporate sellers. If you are an individual living in the US and selling a Canadian property, the 25% and 50% holdbacks stay as they are. Planning for the clearance certificate early still matters.
The section 85 change helps non-residents reorganizing how they hold Canadian property. In exchange, an anti-avoidance rule on later sales of that property would look back five years instead of three.
The budget's headline measure, the Canada Growth Incentive, would exempt up to $15 million of capital gains on qualifying new shares of Canadian start-ups, issued from November 5, 2026. Two cross-border points stand out.
US citizens could still owe US tax on the gain. The US taxes its citizens on worldwide gains and does not recognize Canadian exemptions, just as it ignores the existing lifetime capital gains exemption. With little or no Canadian tax paid, there would be little foreign tax credit to offset the US tax. A US citizen founder should model both sides before relying on this exemption.
You must be resident in Canada for the whole year you claim it. A founder who sells and moves to the US in the same year would not qualify. Anyone planning a move should time it carefully around a sale.
The usual conditions also apply: shares held personally for at least 36 months, many industries excluded, and detailed rules still to come.
Most of this still has to be legislated, and we will update you as the details firm up.
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.