Budget 2026: Key tax measures for startups and emerging companies

Budget 2026 includes new Canada Growth Incentive, expansion of SR&ED program, proposed changes to the taxable preferred share rules and other tax measures

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).

Budget 2026 announced the following tax measures relevant to startups and emerging companies:

• introduction of the Canada Growth Incentive, consisting of 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 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;
• expansion of the activities and expenditures eligible under the scientific research & experimental development (SR&ED) program to include tests, technological validations, and studies conducted to meet regulatory requirements for obtaining the initial approval or certification necessary to commercialize a product or process and certain costs related to the registration and maintenance of intellectual property; and
• 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.

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 our 2026 Canadian Federal Budget Commentary – Tax Initiatives.