Canada Federal Spring Economic Update 2026

May 13, 2026
1:50 pm

Overview

On April 28, 2026, the Minister of Finance and National Revenue, François-Philippe Champagne, presented the 2026 Federal Spring Economic Update, titled “Canada Strong for All”. This publication summarizes the key tax measures announced in the Update.

Personal Income Tax Measures

Disability Tax Credit (DTC) – Streamlined Application Process

The DTC is a non-refundable tax credit intended to recognize the effect of non-itemizable disability-related costs on an individual’s capacity to pay tax. For the 2026 taxation year, the base amount is $10,341, resulting in a maximum federal tax reduction of $1,448.

The Update proposes the following sets of changes to streamline the DTC application process.

Certification for Long-Lasting Medical Conditions

For 2026 and subsequent taxation years, certification requirements will be simplified for certain long-lasting medical conditions. A qualified medical practitioner will only need to certify the existence of the condition itself. Prior to this change, practitioners were also required to separately certify the severity, prolonged nature, and daily living impacts of the impairment.

Public Guardians, Trustees, and Curators

Further, effective for 2026 and subsequent taxation years, provincial or territorial public guardians, trustees, and curators (and public curators in Quebec) will be permitted to certify, on the DTC application form, that an adult under their care, for property matters, has a valid certificate of incapacity issued by a healthcare professional under applicable provincial or territorial laws. Where such certification is provided, a separate medical practitioner certification of the individual’s impairment will not be required.

Scope of Qualifying Medical Practitioners

Effective for 2027 and subsequent taxation years, the types of certified medical practitioners allowed to certify impairments for the purposes of the DTC claim will be broadened. In addition, podiatrists will be added to the list of authorized medical practitioners eligible to certify DTC eligibility.

The expanded certification authority by practitioner type is summarized below:

Practitioner	New Certifiable Impairments
Occupational therapist	Eliminating (bowel or bladder functions), including cumulative effects of multiple restrictions
Physiotherapist	Feeding or dressing; cumulative effects of multiple restrictions pertaining to walking, feeding, and/or dressing
Speech-language pathologist	Feeding or hearing; cumulative effects of multiple restrictions pertaining to speaking, feeding, and/or hearing
Podiatrist (newly added)	Walking impairments within their scope of practice to assess (must hold a provincial license)

Employee Ownership Trust (EOT) and Worker Cooperative Tax Exemption Made Permanent

Introduced as a temporary measure, eligible individuals (other than trusts) may claim an exemption from taxation on up to $10 million in capital gains realized on the sale of a business to an employee ownership trust (EOT) or worker cooperative corporation, subject to certain conditions. The exemption was set to expire at the end of 2026, applying only to qualifying dispositions of shares occurring after 2023 and before the end of 2026.

The Update proposes to make this exemption permanent.

Home Buyers’ Plan (HBP) – Extended Repayment Grace Period

Budget 2024 temporarily extended the Home Buyers’ Plan (“HBP”) repayment grace period from two years to five years for participants who made a first withdrawal between January 1, 2022, and December 31, 2025.

In the Update, the federal government proposes to extend this enhanced five-year grace period to participants making a first withdrawal on or before December 31, 2028. Accordingly, for an individual making a first withdrawal in 2028, repayment would not be required to commence until the 2033 taxation year.

Labour Mobility Deduction for Tradespeople – Increased Limits and Relaxed Distance Rule

Effective for 2026 and subsequent taxation years, the Update proposes the following changes:

Increase in the annual deduction limit from $4,000 to $10,000, with annual indexation thereafter[1];
Reduction in the minimum relocation distance requirement from 150 km to 120 km (i.e., the temporary lodging must be at least 120 km closer to each temporary work location than the taxpayer’s ordinary residence).

Business Income Tax Measures

Accelerated Capital Cost Allowance (CCA) for Low-Carbon Liquefied Natural Gas (LNG) Facilities

The 2025 federal budget proposed reinstating accelerated CCA rates for eligible LNG equipment and related buildings for low-carbon LNG facilities. Eligible assets must be acquired after November 3, 2025 and before January 1, 2035. The 2026 Update provides the below implementation details for such measure.

CCA Rates

To qualify for the accelerated CCA for low-carbon LNG facilities, the facility’s expected emissions intensity of on-site liquefaction activities must not exceed 0.20 tonnes of CO₂ equivalent per tonne of LNG produced annually (tCO₂e/tLNG). Eligible low-carbon LNG facilities may also take advantage of the enhanced first-year Accelerated Investment Incentive (“AII”) deduction for certain capital property.

The applicable rates are as follows:

Class of depreciable property	Eligible Accelerated CCA rate
Class 47 (liquefaction equipment)	50%
Class 1 (non-residential buildings used in LNG facilities)	10%

Eligible and Ineligible Property

Eligible property includes (as part of class 47) equipment forming part of a natural gas liquefaction facility, such as control systems, cooling equipment, compressors, pumps, storage tanks, ancillary equipment, pipelines used exclusively to transport LNG from the facility, and related structures, as well as (as part of class 1) non-residential buildings that are integral to such a facility.

Additionally, equipment used exclusively for regasification would not qualify for the additional allowance. The allowance would also not apply to property acquired for the production of oxygen or nitrogen, electrical generating equipment, or structures such as breakwaters, docks, jetties, wharves, or similar installations. Furthermore, property that was previously used or acquired for use prior to its acquisition by the taxpayer would not be eligible for the additional allowance.

Income Attribution Requirement

These additional CCA allowances may be claimed only against income attributable to the liquefaction of natural gas at a certified facility. Eligible income includes:

Income from the sale of natural gas liquefied by the taxpayer, where the taxpayer owns the gas at the time it enters the facility.
Income from the sale of by‑products generated through the liquefaction process; and
Fees earned from providing liquefaction services in respect of natural gas owned by third parties.

Certification requirement

An LNG facility must first be certified by the Minister of Energy and Natural Resources to claim the accelerated CCA. To obtain certification, facility owners must submit a one-time report prepared by a qualified third-party Canadian engineering firm that includes the expected emissions intensity of the LNG facility, and any other information required by the Minister of Energy and Natural Resources.

Expansion of the Refundable Investment Tax Credit (ITC) for Carbon Capture, Utilization, and Storage (CCUS)

The CCUS investment tax credit is a refundable tax credit designed to support eligible expenditures relating to the capture, transportation, storage, and use of CO₂. The credit currently applies to eligible expenditures incurred from January 1, 2022 to December 31, 2040, with eligible uses limited to dedicated geological storage and storage in concrete.

The Update expands the list of eligible uses for the CCUS tax credit to include Enhanced Oil Recovery (“EOR”), which was not previously an eligible use, effective as of the date of the Update (April 28, 2026), subject to the designation of the applicable jurisdiction.

For EOR to constitute an eligible use, the storage must occur in jurisdictions where sufficient regulations ensure that a minimum of 95% of the CO₂ is permanently stored. The process for designating EOR-eligible jurisdictions follows the same approach as for dedicated geological storage under the existing CCUS rules.

Credit Rates for EOR

The effective credit rates for EOR are set at 50% of the standard CCUS rates for dedicated geological storage or storage in concrete. The applicable rates are as follows:

Equipment Type[2]	Apr. 28, 2026 – Dec. 31, 2035	Jan. 1, 2036 – Dec. 31, 2040
Eligible capture equipment used in a direct air capture project	30%	15%
All other eligible capture equipment	25%	12.5%
Eligible transportation, storage, and use equipment	18.75%	9.375%

Related adjustments will be recognized under the Clean Hydrogen investment tax credit and the Clean Electricity investment tax credit.

Other items

Canada Pension Plan (CPP)

The base CPP contribution rate has been set at 4.95% for employees and employers (9.9% for self-employed individuals). Effective January 1, 2027, the government intends to amend the Canada Pension Plan to implement the following reductions:

Contributor Type	Current Rate	Proposed Rate (Effective Jan. 1, 2027)
Employee / Employer (each)	4.95%	4.75%
Self-Employed	9.9%	9.5%

Prioritization of Advance Income Tax Rulings for Key Projects

The CRA has announced its intention to prioritize requests for advance income tax rulings relating to:

Large-scale, nation-building projects (e.g., housing and infrastructure) and projects of national importance;
Investments that enhance productivity and strengthen critical sectors of Canada’s economy; and
Clean economy initiatives and projects that may benefit from Canada’s suite of clean economy investment tax credits.

Consultation – Canadian Journalism Labour Tax Credit

The government will hold a stakeholder consultation on extending the Canadian Journalism Labour Tax Credit to audio and audiovisual news production. Further details on the consultation process will be released on the Department of Finance website.

Consultation – Charitable Sector Framework

The government will consult with key stakeholders and relevant agencies in 2026-27 on plans to modernize the framework for the charitable sector.

Visit the 2026 Federal Spring Economic Update for more information.

[1] The maximum deductible amount for any temporary relocation remains limited to 50% of an individual’s employment income in respect of that relocation.

[2] Additional details on equipment eligibility will be provided through technical guidance published by Natural Resources Canada.