With the Canadian federal budget now passed into law, the tax landscape for 2026 is coming into sharper focus. Canadian businesses, investors, and non‑profit organisations are recalibrating their tax planning to respond more nimbly to legislative changes, judicial developments, evolving compliance expectations, and policy signals that will shape how they operate and grow.
There were significant income tax and commodity tax developments. Organisations are navigating an exceptionally active period of tax reform: from cancelling the proposed capital gains inclusion rate change to clean economy tax incentives and emerging crypto-asset reporting obligations to an overhaul of the Canadian transfer pricing rules. On the commodity tax side, the government repealed the digital services tax. Renewed policy direction, shifting administrative practices, and a heightened focus on transparency and compliance make informed, forward‑looking planning more critical than ever.
As organisations move through the remainder of 2026, the key pressure points they will need to navigate in the months ahead are outlined below, as further explored in Tax Perspectives: Review of 2025 and 2026 Outlook.
2025 in review: what changed in Canadian tax?
The Liberal government focused on “build Canada strong” by prioritising targeted incentives and productivity measures. Parliament advanced legislation that affects income tax, commodity tax, transfer pricing, clean economy incentives, and charities regulation. Organisations should expect continued reform for the rest of 2026 and prepare for compliance demands, shifting incentives, and new administrative practices.
Productivity super deduction: what is new?
Several temporary measures were introduced to encourage Canadian investment. These include immediate expensing for capital expenditures relating to scientific research and experimental development (SR&ED), immediate expensing for certain manufacturing and processing equipment, and enhanced capital cost allowance rates for specific liquefied natural gas assets.
Why it matters
The combined effect reduces Canada’s marginal effective tax rate. Businesses involved in manufacturing and clean energy can accelerate deductions to improve after‑tax results.
Global Minimum Tax Act: how will Canada apply pillar two in 2026?
Budget 2025 confirmed Canada’s intention to proceed with previously announced amendments to the Global Minimum Tax Act, including the implementation of the undertaxed profits rule. Negotiations with international partners will continue to shape timing and scope.
Why it matters
Large multinational enterprises should prepare for compliance, data collection, and potential top‑up tax obligations.
Crypto-asset Reporting Framework and updated Common Reporting Standard: what rules will apply?
Draft legislation released in 2025 would introduce new reporting obligations for crypto‑asset service providers. The implementation of these reporting standards is proposed to commence in 2027.
Why it matters
Financial institutions, exchanges, and service providers may face significant reporting and systems work. Early planning is essential.
SR&ED programme evolution: what changes were proposed?
Budget 2025 confirmed new eligibility for capital expenditures and expanded access to the refundable SR&ED investment tax credit for certain public corporations. The annual expenditure limit will rise to C$6 million.
Why it matters
Companies investing in innovation may qualify for additional refundable credits when engaging in SR&ED.
Clean economy tax credits: what is their status?
The government continued its previously announced implementation of a broad suite of incentives to promote investment for clean energy technology, clean electricity, hydrogen, carbon capture, and clean technology manufacturing.
Why it matters
These incentives are reshaping investment decisions in energy, mining, manufacturing, and infrastructure.
Bare trust reporting deferred: are bare trusts required to file in 2025?
Enhanced reporting rules applicable to trusts (including bare trusts) will now apply to taxation years ending on or after December 31 2026. This extends relief for 2025 and provides additional time for compliance preparation.
Why it matters
Trustees, advisers, and financial institutions should build reporting frameworks in respect of bare trusts in advance of the implementation of these enhanced trust reporting rules.
Modernised transfer pricing rules: how are they changing?
The updated rules emphasise economic substance and actual conduct of the parties. Timeframes to provide the contemporaneous documentation requested by the Canada Revenue Agency (CRA) will tighten to 30 days once requested.
Why it matters
Businesses should ensure that they diligently document their transactions with non-arm’s-length non-residents and retain such contemporaneous documentation in the event of a potential audit.
Goods and services tax/harmonised sales tax updates: what are the key changes?
Notable developments include the goods and services tax treatment of partnerships, the new Manitoba retail sales tax on cloud computing services, and the proposed repeal of the Digital Services Tax Act.
Why it matters
Businesses offering digital services should reassess tax exposure and compliance processes.
Underused housing tax repeal: is it still in force?
The government proposes to eliminate the underused housing tax beginning in 2025, but the reporting and compliance obligations remain for 2022 to 2024.
Why it matters
Notwithstanding the proposed repeal of the Underused Housing Tax Act, property owners and their advisers must continue to meet historical filing obligations to avoid penalties.
Tax disputes and litigation: what audit and dispute changes should taxpayers expect?
Proposed new audit powers will expand the CRA’s ability to demand information, suspend reassessment periods, and compel responses under oath.
Why it matters
Businesses should prepare for more intensive audits, accelerated timelines, and increased documentation burdens.
Charities and non-profits: what changed for the charitable sector?
Although Budget 2025 introduced only minor amendments relating to charities and non-profit organisations, there were significant judicial decisions rendered in 2025 that impact charitable municipal property tax exemptions in Ontario and cross‑border gifts.
Why it matters
Non-profit organisations may have new pathways to access municipal property exemptions in Ontario, but charities should continue to be cautious when making cross-border gifts to non‑qualified donees.
For deeper analysis, clear summaries of key legislative developments, and practical takeaways, you can explore the full guide – Tax Perspectives: Review of 2025 and 2026 Outlook.
