Canadian Construction Law: Budget 2026

On November 5, 2026, Canada’s Minister of Finance and National Revenue, François-Philippe Champagne, tabled the Liberal Government’s second budget, Masters of our Destiny, in the House of Commons (Budget 2026).

Among other things relevant to the Canadian construction industry, Budget 2026 announced the following tax measures: 

• introduction of the Canada Growth Incentive, consisting of (a) a new capital gains exemption for qualifying Canadian-resident individuals (other than trusts) on up to $15 million in capital gains realized on the disposition of qualifying shares, and (b) an enhanced small business rollover to provide for a deferral on capital gains realized on the sale of shares of qualifying Canadian businesses if the sale proceeds are reinvested in another Canadian small business, although businesses operating in the real estate sector generally would not qualify for the Canada Growth Incentive;
• simplification of withholding and remittance rules when non-residents dispose of “taxable Canadian property” (TCP), by reducing the applicable withholding and remittance rates where the non-resident seller of TCP is a corporation and exempting fully tax-deferred section 85 transfers of TCP from such withholding and remittance requirements (provided the required section 85 election form (CRA Form T2057 or T2058) and a notification to the Canada Revenue Agency are filed within 30 days of the disposition);
• exclusion of dividends paid by “Canadian-controlled private corporations” on taxable preferred shares from Part VI.1 tax and increasing the dividend allowance and the related threshold for such allowance for the purposes of these rules; and
• expansion of the previously-proposed exception to the “excessive interest and financing expenses limitation” rules for interest and financing expenses incurred before 2036 on borrowed funds used by the borrower to acquire, build or convert a property into purpose-built rental housing in Canada, so that it also applies where borrowed funds are used by another entity in the same related or affiliated group (or a partnership in which the group holds at least a 40% interest).

Budget 2026 also invites submissions from stakeholders on a narrow corporate loss transfer rule that would allow current-year non-capital losses to be transferred within a wholly-owned corporate group, where the transferor and transferee each have a single permanent establishment in the same province or territory.

For a discussion of these tax measures and others in Budget 2026, please see McCarthy Tétrault’s 2026 Canadian Federal Budget Commentary – Tax Initiatives.