The federal government’s Spring Economic Update 2026 arrives at an interesting moment. With a newly secured parliamentary majority, the federal government has more room to act decisively on economic policy. The Update opted for a continuation of incremental measures, proposing a mix of targeted spending, tax adjustments and labour market initiatives.
While the proposals are not sweeping in scope, they include several specific funding commitments and policy changes that could influence planning decisions over the coming years.
But first, the Spring Economic Update delivered modestly positive news on the fiscal front. The projected deficit for 2025–26 has been revised down to $67 billion from an expected $78.5 billion, largely due to stronger-than-expected tax revenue— particularly from the energy sector amid elevated global oil prices. The challenge is that ongoing geopolitical instability, supply chain disruptions and energy market swings make long-term projections fragile.
Proposed tax changes for small businesses and individuals
From a tax perspective, the Update introduces a handful of practical measures, though stops short of broader reform. One notable change is the reduction in the base Canada Pension Plan contribution rate to 9.5 per cent (from 9.9 per cent) beginning in 2027. The proposed measure will marginally reduce payroll costs for employers while increasing take-home pay for employees.
Another significant proposal for business owners is the decision to make the Employee Ownership Trust capital gains exemption permanent. This allows up to $10 million in capital gains to be realized tax-free when a business is sold to employees through an eligible structure. For entrepreneurs considering succession, this expands the toolkit beyond traditional third-party sales or family transitions.
The government also confirmed it will move ahead with previously announced measures, including accelerated capital cost allowances for certain assets (notably in manufacturing and low-carbon energy projects to support capital investment in these sectors), and ongoing technical adjustments to corporate tax rules. Additionally, the Canada Revenue Agency will fast-track advance tax rulings for large-scale or nationally significant projects—a step aimed at reducing uncertainty for major investments.
Skills and labour: Significant investment in trades
A major theme in the Update is labour capacity—specifically, addressing shortages in skilled trades. The government is committing billions in new funding and direct financial incentives including:
- $2 billion over five years (starting 2026–27), plus $262 million ongoing, to accelerate training and certification for skilled tradespeople
- An additional $331 million over five years, with $18 million ongoing, to enhance apprenticeship training systems
- $3.4 billion over five years, plus $468 million ongoing, to help apprentices complete training and transition into permanent employment
- Direct financial supports, including a $400 weekly income top-up for apprentices during in-class training and a $5,000 completion bonus for apprentices that obtain Red Seal certification
Additional workforce measures include:
- $250 million over five years, plus $45 million ongoing, to expand skilled trades capacity through the Canadian Armed Forces
- $356.2 million over five years to extend Employment Insurance supports for seasonal workers
The Labour Mobility Deduction for Tradespeople will also increase significantly, allowing up to $10,000 in eligible expenses (up from $4,000), indexed to inflation.
For small and mid-sized businesses—particularly in construction, manufacturing, and related sectors—these measures are meaningful. Labour availability remains one of the most immediate constraints on growth, and increased support for trades could help ease pressure over time.
Capital and investment
The headline investment initiative is the proposed Canada Strong Fund, a $25 billion sovereign wealth investment vehicle intended to support infrastructure and nation-building projects. At this stage, details are limited. The fund is expected to focus on equity investments and, according to the government, will include opportunities for participation by Canadian investors. While potentially significant, the lack of clarity makes it difficult to assess near-term impact.
There are also targeted measures to support specific sectors, including low-carbon LNG development through reinstated accelerated depreciation rules. Other initiatives aimed at supporting infrastructure, community development and environmental priorities include:
- A reallocation of $2.8 billion over five years to support Indigenous development initiatives
- $957.8 million over five years for the Small Craft Harbours Program
- $160.8 million over five years to protect marine ecosystems, including whale habitats
Housing and financing
Several measures in the Spring Economic Update aim to modestly improve housing supply and financing flexibility.
Mortgage insurance rules will be adjusted to allow greater access to financing for multi-unit residential properties (specifically five- to eight-unit buildings), along with enhancements for smaller multi-unit construction.
The Home Buyers’ Plan repayment grace period will also be extended from two to five years for participants that have made withdrawals between January 1st, 2026, and December 31st, 2028. These measures are designed to improve access to financing and support housing supply.
Support for families and communities
Families will benefit from improvements to the Disability Tax Credit, including a streamlined application process, expanded eligibility certification and $42.5 million over five years in funding for the Canada Revenue Agency to manage program administration. There is also $18.7 million in funding over three years for the Community Volunteer Income Tax Program, which supports vulnerable populations in accessing tax filing assistance.
Several additional measures are directed toward individuals, families, and community organizations including:
- $75 million over five years for the Canada Community Security Program
- $755 million over five years, plus $118 million ongoing, to support sports programs and athletes across Canada
- Indigenous health support funding includes $794 million in 2026–27 for the Non-Insured Health Benefits Program, $601 million in 2026–27 for First Nations youth and $700 million over six years for Indigenous child and family services
Compliance and financial integrity
The government is increasing funding to combat financial crime, including investments in enforcement, prosecution and regulatory oversight. Proposals include $352.7 million over five years, plus $82.1 million ongoing, for the Financial Crimes Agency; $46.2 million over five years, plus $11.5 million ongoing, for the Public Prosecution Service of Canada; and $19.6 million over five years for the Department of Finance.
For business owners and organizations, this signals continued scrutiny in areas such as anti-money laundering compliance, financial reporting and governance practices. While not headline-grabbing, these measures reinforce the importance of maintaining strong internal controls and documentation.
International and climate commitments
Lastly, Ottawa is allocating funding toward international and climate-related initiatives:
- $3.168 billion over five years to support climate initiatives in developing countries
- Approximately $2.7 billion, starting in 2028–29, to expand FinDev Canada financing for climate-related projects
- $2 billion over three years to support military training efforts in Ukraine
- $103.8 million over five years to establish a Defence Investment Agency
The bottom line
The Spring Economic Update 2026—which introduces approximately $37.5 billion in new measures over six years—delivers a mix of targeted relief, sector-specific investments and administrative improvements. For many business owners, there are tangible benefits, particularly in areas such as succession planning, payroll costs and workforce development.
Business owners and individual taxpayers should view this Update as a set of incremental adjustments—worth understanding, but unlikely to fundamentally change most planning assumptions in the near term.
The Adams + Miles team
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