Spring Economic Update 2026

SEU 2026 introduces a range of new business and personal tax measures and confirms the government’s intention to proceed with several previously announced initiatives. Notable new measures include streamlining of the Disability Tax Credit certification process, making the Employee Ownership Trust capital gain exemption permanent, and extending the five-year repayment grace period under the Home Buyers’ Plan, among other proposals.

All proposals contained in SEU 2026 must still proceed through the parliamentary process before they’re enacted into law. Given that the Liberal government has recently secured a majority in the House of Commons, the government may be able to advance these without significant delay.

Fiscal update

SEU 2026 projects a deficit of 66.9 billion in 2025-26, which is lower than the $78.3 billion projected in the 2025 Federal Budget (Budget 2025).

SEU 2026 outlines two economic scenarios alongside the regular fiscal outlook projection. The “higher investment scenario” assumes that sustained global demand for energy will increase investment in Canada and the “global supply disruptions scenario” where global conflict disrupts supply chains and leads to poor global financial conditions.

The following table outlines key economic indicators in all considered scenarios:

Tax measures

Business tax measures

Accelerated capital cost allowance rates for low-carbon LNG facilities

SEU 2026 provides implementation details for the proposal to reinstate the accelerated capital cost allowances (CCA) for eligible liquefied natural gas (LNG) equipment and related buildings for low-carbon LNG facilities, as announced in Budget 2025.

The accelerated CCA rate will be 50% for new Class 47 liquefaction equipment and 10% for new Class 1 non-residential buildings that are part of LNG facilities.

To qualify, a facility must:

• Limit the expected emissions intensity of their on-site liquefaction activities to be under a specified threshold.
• File a report prepared by a qualified third-party Canadian engineering firm to receive certification from the Minister of Energy and Natural Resources.

Certified facilities would generally be subject the same rules as the prior LNG accelerated CCA regime that expired at the end of 2024, including limits on claiming the additional allowance only against income attributable to liquefaction at the facility.

The accelerated CCA rates would be available for eligible assets acquired on or after November 4, 2025, and up to the end of 2034.

Investment tax credit for Carbon Capture, Utilization and Storage

SEU 2026 expands the Carbon Capture, Utilization and Storage (CCUS) investment tax credit to include eligible expenditures relating to enhanced oil recovery (EOR), at rates equal to 50% of those available for dedicated geological storage or storage in concrete. Access to the credit would remain subject to review by Environment and Climate Change Canada and jurisdiction designation by the Minister of the Environment. This measure would apply as of April 28, 2026.

Personal tax measures

Disability Tax Credit certification

SEU 2026 streamlines the Disability Tax Credit (DTC) certification for individuals with certain listed long-lasting medical conditions. For these conditions, a qualified medical practitioner would only need to certify that the individual has the condition and would no longer need to complete the detailed sections on severity, duration, and impacts to daily living.

The update also expands the impairments that certain qualified medical practitioners may certify, including adding licensed podiatrists who may certify certain walking impairments that are within their scope of practice. Additionally, provincial public guardians and trustees will be permitted to certify that an adult under their care for property matters has a valid certificate of incapacity in respect of decision-making, such that a medical practitioner would no longer be required to certify the individual’s impairment for the DTC application.

Note that these proposals don’t change the eligibility criteria for the DTC, and the CRA can still request additional information to confirm eligibility. These measures would apply to DTC certifications issued for the 2026 and subsequent years (while changes to who may certify certain impairments would apply to DTC certifications issued after 2026 for the 2027 and subsequent years).

Employee ownership trust capital gain exemption

SEU 2026 makes the existing tax exemption of up to $10 million of capital gains realized on the sale of a qualifying business for employee ownership trust (EOT) or worker cooperative corporation permanent. The exemption would continue to be available only where the existing statutory conditions are satisfied. Currently, the exemption applies only to qualifying dispositions of shares that occur after 2023 and before the end of 2026.

Home Buyers’ Plan

The update extends the availability of the existing temporary five-year grace period under the Home Buyers’ Plan (HBP) to participants making their first withdrawal on or before December 31, 2028. Currently, the grace period is only available for first-time withdrawals up to the end of 2025. Under this grace period, no repayment is required during the first five years following the year of withdrawal, and the 15-year repayment period begins in the fifth year rather than the second year. As a result, an individual making their first HBP withdrawal in 2026 would be required to begin repayments in 2031 rather than in 2028.

Labour Mobility Deduction for Tradespeople

SEU 2026 increases the annual limit on eligible temporary relocation expenses under the labour mobility deduction for tradespeople to $10,000 in 2026 (from $4,000), with future annual indexation. As well, the update reduces the distance requirement for an eligible temporary relocation so that the temporary lodging must be at least 120 kilometres (rather than 150 kilometres), closer to the temporary work location than the taxpayer’s ordinary residence. These measures apply to 2026 and subsequent years.

Sales tax measures

Partnering with Provinces and Territories

The update reaffirms the federal government’s partnership with provinces and territories to help reduce barriers and costs relating to housing supply, as proposed in Bill C-26, the Improving Housing Supply Act, introduced in March 2026.

This includes a partnership with the Province of Ontario which would provide 13% HST relief for eligible new homes valued up to $1 million and partial relief for new homes between $1 million to $1.85 million, for eligible purchase and sale agreements entered into between April 1, 2026, and March 31, 2027.

Previously announced tax measures

SEU 2026 confirms the government’s intention to proceed with several previously announced measures, including proposals introduced in Budget 2025 and certain draft legislative initiatives, following consultations with stakeholders. Below are highlights of previously announced proposals: 

• Changes to non-profit organization (NPO) reporting which require more NPOs to file an information return, and introduce a short-form return for smaller organizations
• A temporary 100% deduction for the cost of eligible manufacturing and processing (M&P) buildings, including additions or alterations to existing buildings, purchased on or after November 4, 2025, 90% or more of the floor space of which is used to manufacture or process goods for sale or lease, among other conditions.
• Changes to the RDTOH refund rules to prevent tax deferral from intercorporate dividends between affiliated CCPCs with staggered balance due dates by suspending a payer’s refund (subject to exceptions). The suspended refund may generally be released only when dividends are ultimately paid to a non-affiliated and non-connected corporation or an individual, and the measure applies to dividends paid in taxation years beginning on or after November 4, 2025.
• Broadening of the existing anti-avoidance rules that prevent deferral or avoidance of the deemed disposition of trust property through trust-to-trust transfers to include indirect transfers.
• Providing the CRA with discretion to file a tax return for a taxation year on behalf of individuals who meet certain criteria.
• GST relief for first-time home buyers on new homes up to $1 million and partial relief for new homes values between $1 million and $1.5 million.
• Introducing a Canada Groceries and Essentials Benefit, which builds on the current GST credit and provides additional support through: a one-time top-up payment equal to a 50% increase of the 2025-2026 GST Credit, to be issued on June 5; and an increase of the GST credit by 25% for 5 years starting in July 2026.
• Temporary relief to excise taxes on certain fuels, including gasoline, diesel, and aviation fuels. For the period April 20, 2026 to September 7, 2026 the federal excise tax rate for these fuels will be 0%.

Other notable measures

Canada Pension Plan contributions

SEU 2026 reduces the contribution rate in the base Canada Pension Plan (CPP) to 9.5% of wages (from 9.9%), effective January 1, 2027.

Build Canada Apprenticeship Service

The Build Canada Apprenticeship Service provides employers with wage subsidies of up to $10,000 for an apprentice’s first-year salary.

Apprenticeship training grant

SEU 2026 offers apprentices a grant of $400 per week during periods of mandatory in-class technical training, to a maximum of $16,000 per apprentice, on top of employment insurance benefits.

Prioritizing CRA advance tax ruling requests

The update announces that the CRA will prioritize advance tax ruling requests for nationally important projects that are large-scale or nation-building, such as housing and infrastructure, and projects benefitting from clean economy investment tax credits.

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Disclaimer

The information contained herein is general in nature and is based on proposals that are subject to change. It is not, and should not be construed as, accounting, legal, or tax advice or an opinion provided by Doane Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, specific circumstances or needs and may require consideration of other factors not described herein.