April 29, 2026•1 Minute

Canada - Economic and Financial Update - Spring 2026

On April 28, 2026, the federal government provided an update on Canada’s economic and financial situation.

This economic update follows on the various measures announced recently, including the permanent abandonment of the proposed capital gains tax increase.

Canada Grocery and Essential Needs Benefit

The government announced the creation of a new benefit intended to replace the Goods and Services Tax (GST) Credit. This new benefit will provide a one-time supplementary payment equal to 50% of the annual value of the GST Credit for the 2025–2026 period. Benefit payments will be increased by 25% over the next five (5) years.

Enhancement of the Investment Tax Credit for Carbon Capture, Utilization and Storage (CCUS) to Include Enhanced Oil Recovery

The government proposes to add enhanced oil recovery to the list of eligible uses under the CCUS investment tax credit.

  • The credit rates would be set at 30% for direct air capture equipment, 25% for other carbon capture equipment, and 18.75% for carbon transportation, storage, and utilization equipment through 2036.
  • Enhanced oil recovery would become an eligible use as of the date on which the Spring 2026 Economic Update is tabled, subject to the designation of a jurisdiction by the Minister of the

Introduction of Accelerated Capital Cost Allowance Rates for Low-Carbon Liquefied Natural Gas Facilities

The accelerated capital cost allowance (CCA) rate would be set at 50% for liquefaction equipment (Class 47) and 10% for non-residential buildings      (Class 1) used in liquefied natural gas facilities.

This measure would apply to assets acquired on or after November 4, 2025, and before January 1, 2035.

Administrative Simplification of the Scientific Research and Experimental Development (SR&ED) Tax Incentive Program

The Canada Revenue Agency (CRA) implemented, as of April 1, 2026, an optional pre-approval process aimed at obtaining an initial technical approval for eligible SR&ED projects.

  • This process is intended to allow businesses to be informed of eligibility decisions within eight
  • For applications submitted under this optional process, processing times would be reduced to 90 days, representing half of the previous timeline.

 

Elimination of GST for First-Time Homebuyers Purchasing New Homes

To reduce the cost of home ownership, the government is eliminating the GST on the purchase of a new first home valued at less than $1,000,000 and reducing the GST on the purchase of a new first home valued between $1,000,000 and $1,500,000.

 

Making the Tax Exemption Permanent for Employee Ownership Trusts (EOTs)

The Economic Update proposes to make permanent the tax exemption currently available to Employee Ownership Trusts (EOTs), namely the temporary $10,000,000 capital gains tax exemption.

Labour and Workforce Measures

  • Enhancement of the labour mobility deduction for tradespeople by increasing the maximum annual deductible expenses from $4,000 to $10,000 and reducing the minimum eligible relocation distance from 150 km to 120 km, effective for the 2026 taxation year. The maximum annual deductible amount will be indexed to inflation going forward.
  • Reduction of the base Canada Pension Plan (CPP) contribution rate from 9.9% to 9.5%, effective January 1, 2027.
  • Extension of Employment Insurance support for seasonal workers in 13 targeted regions through October 2028.

Extension of the Home Buyers’ Plan Grace Period

Proposal to extend the grace period for the repayment of funds withdrawn from a Registered Retirement Savings Plan (RRSP) under the Home Buyers’ Plan by increasing the period from two years to five years. This proposal applies to participants who made their first withdrawal between January 1, 2026, and December 31, 2028.

Improving Access to the Disability Tax Credit

To enable more Canadians to claim the Disability Tax Credit, the government proposes various measures to simplify access to tax relief, including:

  • The introduction of a simplified application process for individuals with a formal diagnosis of certain long-term medical conditions.
  • The addition of podiatrists to the list of health professionals authorized to certify eligibility for the
  • Allowing provincial and territorial public guardians and trustees to certify eligibility for the credit on behalf of adults under their guardianship.

For more information on the new measures announced in the Economic Statement, please contact your FBL representative.

Sources: Department of Finance Canada, Spring 2026 Economic Statement

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