Budget 2026: Key tax measures for M&A and private equity

Budget 2026 proposes new Canada Growth Incentive, reduced TCP withholding, simplified tax compliance and other international tax reporting measures

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

Budget 2026 announced several measures aimed at encouraging investment in Canadian businesses and simplifying certain tax compliance requirements. 

In particular, Budget 2026 proposes:

• a new 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;
• changes to the taxable Canadian property rules, including reduced withholding and remittance rates for non-resident corporate vendors and relief from withholding and remittance requirements for fully tax-deferred section 85 transfers (provided the required section 85 election form (CRA Form T2057 or T2058) and notification to the Canada Revenue Agency are filed within 30 days of the disposition);
• the simplification of certain foreign property reporting obligations by increasing the cost amount threshold for filing Form T1135 from $100,000 to $200,000 and increasing the cost amount threshold for simplified reporting from less than $250,000 to less than $500,000;
• consultations on potential measures to close “gaps” and “strengthen” Canada’s Common Reporting Standard (CRS) in response to areas of misalignment with the OECD’s Common Reporting Standard; and 
• the strengthening of the administrative penalty regime applicable to the CRS and other information-reporting frameworks, such as the Reporting Rules for Digital Platform Operators and the Crypto-Asset Reporting Framework.

Budget 2026 also confirms the Government’s intent to expand and strengthen its bilateral tax treaty network to reduce barriers to trade and investment with key international trading partners and ensure Canada’s competitiveness as a location for pension and sovereign wealth funds to invest.

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