Following Ontario’s recent provincial budget, the federal government released its 2026 Spring Economic Update. While much of the update focuses on economic uncertainty, several tax changes will directly impact individuals, families, and business owners.
Individuals & Families
CPP Contribution Rates Are Decreasing
Starting January 1, 2027, the base CPP contribution rate will drop from 9.9% to 9.5%. For an employee earning $70,000, this means roughly $133 in annual savings, with employers benefiting equally.
Middle-Class Tax Cut Now in Effect
Approximately 22 million Canadians are already benefiting, with two-income families saving up to $840 annually. Reviewing your return with an advisor can help ensure you’re capturing the full benefit.
Capital Gains Tax Increase Cancelled
The proposed increase to the capital gains inclusion rate has been withdrawn, maintaining the current rate and providing certainty for investors and business owners planning dispositions.
Temporary Fuel Tax Relief
The federal fuel excise tax is temporarily suspended on April 20th until September 7, 2026. This measure is expected to reduce Canadians’ bills at the gas station by up to 10 cents per litre.
Home Buyers’ Plan Repayment Relief Extended
First-time buyers withdrawing from RRSPs between 2026 and 2028 now benefit from a five-year grace period before repayment begins, offering added flexibility during the early years of homeownership.
GST Relief for First-Time Home Buyers
GST has been eliminated on new homes up to $1 million and reduced on homes up to $1.5 million, potentially saving buyers up to $50,000.
Disability Tax Credit Improvements
The DTC application process is being streamlined, with expanded eligibility certification and reduced administrative burden.
Business Owners & Employers
Employee Ownership Trust (EOT) Exemption Made Permanent
The $10 million capital gains exemption on qualifying sales to an EOT is now permanent, strengthening this as a long-term succession planning strategy.
SR&ED Program Processing Improvements
Businesses can now receive pre-claim eligibility decisions within eight weeks, with faster processing timelines for reviewed claims.
Labour Mobility Deduction Increased
The deduction for tradespeople has been increased from $4,000 to $10,000, with a reduced distance threshold. This may support workforce mobility and hiring.
Clean Energy Investment Tax Credits
The update confirms expanded incentives for low-carbon projects, including accelerated write-offs and enhanced credits for carbon capture initiatives.
S+C Partners is committed to helping you.
Our dedicated team of tax professionals is here to assist you. Please contact us at 905-821-9215 or tax@scpllp.com if you have any questions regarding any of the tax updates.
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