OTTAWA — The federal budget has zeroed in on business growth with a suite of tax measures and incentives designed to spur private-sector investment.
The central business pitch of the 2026 budget tabled Thursday aims to encourage Canadian companies to invest more, expand and become more competitive internationally.
The budget, entitled Masters of our Destiny, includes capital gains tax breaks, incentives for companies investing in equipment and expanded tax support for research and innovation.
But some business leaders and groups said the budget falls short in addressing the needs of small businesses.
“While there’s a mega deduction and there’s a focus on mega projects, my takeaway is that this is a mega disappointing budget for small business owners,” said Dan Kelly, president and chief executive of the Canadian Federation of Independent Business.
His comments were echoed by Hash Aboulhosn, chief growth officer at Merchant Growth, who said that while measures like the productivity mega deduction are a step in the right direction, they do “little for those who can’t afford the upfront costs.”
“There is a disconnect between the growth Ottawa wants to see and the reality for Canada’s small businesses,” he said. “Many can’t afford to make those investments in the first place.”
A centrepiece business measure in the budget is a new tax exemption on up to $15 million in capital gains from eligible investments in Canadian companies.
The tax break would apply to qualifying shares issued between budget day and the end of 2036 and held for at least 36 months. Eligible companies must have combined assets with a value of no more than $100 million when the shares are issued.
The measure is expected to cost Ottawa $80 million in 2029-30 and $485 million in 2030-31.
“It reduces the cost of investing,” said Jean-François Ruel, senior economist at the Canadian Tax Observatory.
“Ultimately when you look at a package of investment, you look at everything — including tax — in terms of your costs,” he said. “This reduces your exit cost.”
The budget also enhances the small business rollover of taxes when capital gains are reinvested in another Canadian small business.
The government said the measures help “level the playing field with the United States, encourage more capital to flow to Canadian businesses, and enable successful entrepreneurs to reinvest their proceeds into Canada.”
Kelly with the CFIB said the budget does deliver some good news for small businesses through measures like the enhanced rollover provision.
