OTTAWA — The federal budget has zeroed in on business growth in Canada with a suite of new tax measures and incentives aimed at spurring private-sector investment, entrepreneurship and innovation.
The 2026 budget tabled Thursday includes a new Canada Growth Incentive program the government said will strengthen Canada’s tax competitiveness for businesses.
The program’s banner measure is a new tax exemption on up to $15 million in capital gains earned on successful eligible investments.
The tax break would apply to shares issued between budget day and 2037 by a corporation with a value of up to $100 million and held for at least 36 months. The measure is expected to cost $80 million in 2029-2030 and $485 million in 2030-2031.
“It reduces the cost of investing,” said Jean-François Ruel, senior economist at the Canadian Tax Observatory.
“Ultimately when you look at a package of investment, you look at everything — including tax — in terms of your costs,” he said. “This reduces your exit cost.”
The budget also enhances the small business rollover of taxes when capital gains are reinvested in another Canadian small business.
The government said the measures help “level the playing field with the United States, encourage more capital to flow to Canadian businesses, and enable successful entrepreneurs to reinvest their proceeds into Canada.”
Dan Kelly, president and chief executive of the Canadian Federation of Independent Business, said the budget fails small businesses.
“While there’s a mega deduction and there’s a focus on mega projects, my takeaway is that this is a mega disappointing budget for small business owners,” he said.
“There’s not a single measure in here that will reduce the costs or taxes that businesses pay by a nickel.”
Kelly said the budget does deliver some good news for small businesses through the Canadian Growth Incentive, including the enhanced rollover provision.
“If you sell your business, but then you invest that money back into a new one, you’re not going to get hit with capital gains right away,” he said. “It already exists but they’re making it a little bit more flexible.”
The budget also includes what the government calls “the most ambitious effort in decades” to simplify the tax system.
It said the new package of reforms will simplify tax rules, streamline reporting requirements and modernize tax administration.
Randall Bartlett, deputy chief economist with Desjardins Group, said the new measures will have a positive but modest impact on business investment.
“The tax consideration is almost like the icing on the cake,” he said. “It contributes positively to inducing investment in Canada … It’s not something that’s necessarily going to lead to tens of billions of dollars in investment overnight.”
The 511-page budget lays out a three-pronged approach to creating a what the government calls an “investment supercycle” through measures to spur investment, entrepreneurship and innovation.
The government said its productivity mega deduction unveiled in Sept. 15 encourages investment by reducing tax on new investments to 6.4 per cent — less than half the rate in the United States.
On entrepreneurship, Ottawa said the Canada Growth Incentive will motivate business leaders to reinvest gains back into their companies.
And on innovation, the budget introduced a $930-million expansion of the scientific research and experimental development tax incentive program to encourage businesses to develop new products and technologies and bring them to market.
“All of these pieces put together are supportive of growth and investment in Canada over the longer term,” Bartlett said. “The productivity mega deduction is the big one and all of these add up to provide a more investment-friendly environment in Canada.”
Among the measures to simplify business tax rules is a plan to reduce the administrative and compliance burden of the taxable preferred share regime by exempting dividends paid by Canadian-controlled private corporations.
The budget plans to introduce a corporate loss transfer rule that would allow the transfer of current-year non-capital losses within wholly owned corporate groups.
It also proposes simplifying the tax instalment regime for self-employed business owners.
The government has set May 15 as the new single due date for filing returns and paying taxes owed.
This report by The Canadian Press was first published Nov. 5, 2026.
Brett Bundale, The Canadian Press
