Federal Spring Economic Update 2026 – What It May Mean for You

On April 28, 2026, Finance Minister François-Philippe Champagne tabled the Spring Economic Update 2026 ("Canada Strong for All"). It is the first fiscal update tabled by Prime Minister Mark Carney's re-elected government and follows only months after Budget 2025.

The Update contains some unique measures like the introduction of Canada’s first sovereign wealth fund. Importantly, it does not introduce broad changes to personal income tax rates, corporate tax rates, or the capital gains inclusion rate. Instead, it leans on a relatively short list of targeted tax measures such as a reduction to the Canada Pension Plan contribution rate, plus a series of initiatives in housing, consumer protection, and economic development.

The deficit for the recently completed fiscal year came in at $66.9 billion, less than the $78.3 billion projected in the November 2025 budget. This was helped in part by a surge in oil-related revenue.

The Update outlines an additional $37.5 billion in newly announced spending and reiterates the government's commitment to eliminate the operating deficit (day-to-day program costs) over the next three years, while continuing to run capital deficits to finance investment. The overall budgetary outlook projects deficits in excess of $50 billion per year through 2031.

Below are the measures we expect to be most relevant to you, your families, and your businesses.

Key Spring Economic Update 2026 Items

1) Canada Strong Fund and the Major Projects Office – a new investment backdrop 

The Update formally launches two of the Carney government's signature economic initiatives: the Canada Strong Fund and the Major Projects Office (MPO). Together, they represent a deliberate effort to mobilize public and private capital into long duration Canadian assets. If executed as intended, these initiatives could meaningfully expand the domestic investment opportunity set over the coming decade.

• Canada Strong Fund: This is Canada's first national sovereign wealth fund, launched with an initial $25 billion endowment. It is structured as an arm's-length, independent Crown corporation reporting to Parliament. The Fund will invest alongside the private sector and international partners across clean and conventional energy, critical minerals, agriculture, and infrastructure. The stated objective is to compound capital over time through investment and asset recycling, rather than fund near-term operating priorities.  The government has indicated it will launch a public investment product, not dissimilar to a mutual fund, that allows Canadians to invest directly in the Fund and earn a dividend. Specific design and access details are subject to consultation over the coming months.
• Major Projects Office: Established in 2025 and based in Calgary, the MPO is the federal coordination point for nation building projects under the Building Canada Act. It compresses approval timelines from roughly five years to two through a "one project, one review" model.The Update confirms an initial slate of 21 nation-building initiatives expected to support 60,000 construction jobs, plus more than $125 billion in new investment: new mines, LNG, hydro/clean power, ports, and transportation corridors. Indigenous partners are slated to take equity stakes in projects.

Sovereign wealth funds are not new globally. Canada has a precedent in the Alberta Heritage Savings Trust Fund, established in 1976. However, the Canada Strong Fund will be Canada's first national sovereign wealth fund.

Comparable models vary internationally. Norway’s Government Pension Fund Global, the largest in the world at over U.S. $2 trillion, invests exclusively abroad to insulate the domestic economy. By contrast, Singapore’s Temasek takes a more active role in domestic and strategic investment. The Canada Strong Fund’s structure appears more in line with Temasek, though it has not yet been defined. Further details are expected in the months ahead.

The combination of $25 billion in catalytic public capital, faster permitting, and an explicit federal mandate to “crowd-in” private investment could allow individual investors to participate in sectors and assets that have historically been limited to pensions and institutional capital such as infrastructure, advanced manufacturing, energy, mining, and agriculture. Nicola Wealth clients have had access to similar asset classes since 2016 through the Nicola Global Infrastructure LP.

Planning considerations

• We are monitoring the Canada Strong Fund's proposed public offering closely. Until details emerge regarding eligibility, fee structure, liquidity, and registered-account compatibility, it is too early to assess its merits. We will share an updated view once more details are released.
• Our private capital, real estate and infrastructure teams continue to evaluate how the MPO pipeline may influence deal flow, valuations, and partnership opportunities in our existing private market mandates.
• Capital deployment of this scale typically requires many years before attractive returns can be realized. We continue to favour broad, diversified exposure to existing, cash flowing assets over concentrated positioning tied to any single project or theme.

2) No broad changes to the tax act

 The Update does not propose changes to:

• Federal personal income tax rates or brackets
• Federal corporate tax rates (general or small business)
• The capital gains inclusion rate
• The principal residence exemption
• The Lifetime Capital Gains Exemption
• The Alternative Minimum Tax framework

This absence of broad tax measures is notable given the scale of projected deficits and the policy debate surrounding capital gains in 2024/2025. The Update also makes no mention of a wealth tax, effectively leaving top marginal tax rates in effect:

^{2026 top combined federal/provincial marginal tax rates. Ontario figures include the Ontario surtax. Capital gains assumes a 50% inclusion rate.}

Planning considerations

• We will continue to base planning assumptions on the current federal marginal tax framework, layered with provincial rates.
• Maintaining the status quo on capital gains provides high net worth families with greater certainty around planning areas like asset sales, portfolio rebalancing, and estate freezes. This means families can expend less effort in attempting to time material events simply to align with changing tax factors.
• Persistent deficits do increase the likelihood of future tax changes, particularly on higher incomes or corporately-held investment assets. We will continue to monitor and stress-test plans accordingly.

3) Reduction in the base Canada Pension Plan contribution rate 

The Update proposes to reduce the base Canada Pension Plan (CPP) contribution rate from 11.90% to 11.50% combined (employee + employer), effective January 1, 2027. Provincial finance ministers have agreed to the change. A rate reduction is supported by the most recent CPP actuarial report, which projects that the plan can sustain a lower contribution rate while remaining solvent.

For an employee earning $70,000 annually, the government estimates savings of approximately $133 per year, with an equivalent matching amount for the employer.

This change is narrower than it might first appear. As of 2024, there are two levels of CPP. This reduction only applies to the first level:

^{Rates and maximum premium for the employee portion.  Self-employed individuals and business owners pay both the employee and employer portion, effectively doubling their CPP premiums payable.}

The federal government has positioned this as a modest relief for employers and a small take-home benefit for employees, while preserving the long-term benefits of the CPP enhancement program.

Planning considerations:

• For incorporated professionals and business owners assessing salary-versus-dividend compensation strategies, this slightly improves the after-tax efficiency of paying salary. However, other factors (RRSP contribution room, CPP benefit accrual, corporate tax integration, etc.) will still be the primary drivers of compensation decisions.
• Employers with larger employee payrolls should factor cumulative savings into 2027 budgeting.

4) Home Buyers' Plan – extended grace period 

The Update proposes extending the temporary five-year grace period before Home Buyers' Plan (HBP) repayments must begin.

Under current rules, first time home buyers may withdraw up to $60,000 from their RRSP under the HBP. Repayment ordinarily begins in the second year following the withdrawal and must be repaid in full within 15 years.

Budget 2024 temporarily extended this two-year grace period to five years for withdrawals made between January 1, 2022, and December 31, 2025. The Update now extends that five-year grace period to apply to first withdrawals made up to the end of 2028.

Planning considerations

• For first time home buyers, the HBP remains a useful tool, particularly when paired with the First Home Savings Account (FHSA).
• Intrafamily loans or gifts can be structured around HBP withdrawals to optimize down payment funding without disrupting longer term retirement savings.
• In some cases, the extended HBP repayment window may allow parents to defer a portion of housing support until after liquidity events (such as a business or asset sale), when tax free / tax paid capital is available.

5) Employee Ownership Trust - tax exemption made permanent

The Update proposes to make the Employee Ownership Trust (EOT) capital gains exemption permanent.

Originally introduced in Budget 2024 as a temporary measure, the EOT exemption allows an individual selling a qualifying business to an EOT (or worker cooperative) to shelter up to $10 million in capital gains from tax. The exemption was scheduled to expire at the end of 2026. Making it permanent removes a significant deadline pressure and elevates the EOT from a niche tool to a credible, long term succession option.

For many business owners, this may be among the most significant measures in the Update. EOTs offer a pathway to transition ownership internally over time while crystallizing meaningful tax savings, often alongside other strategies such as the Lifetime Capital Gains Exemption. We have written previously on the potential of EOTs to reshape succession planning for Canadian business owners — see our commentary in the Globe and Mail: How the new Employee Ownership Trusts could transform Canada's small businesses.

As an example, consider a business owner selling a qualifying operating company and realizing a $15 million capital gain. Sheltering the first $10 million through the EOT exemption could save roughly $2.7 million in combined federal/provincial personal tax (assuming top marginal rates on capital gains) versus a conventional third-party sale. The economics will of course depend on other factors such as share structure, financing of the sale to employees, and post-sale governance.

Planning considerations

• For business owners with employees who are contemplating exit options, the EOT warrants evaluation alongside traditional exits (e.g. sales to family members, third parties, or private equity companies).
• EOT structures are complex. Eligibility, share valuation, financing, and governance need to be designed carefully.  Where this may be feasible, we will coordinate with your accounting and legal advisors.

6) Disability Tax Credit – streamlined application for certain conditions 

The Update proposes simplifying the Disability Tax Credit (DTC) application process for individuals with a formal diagnosis of more than 40 specified medical conditions, including Alzheimer's disease, dementia, severe autism (level 3), Down syndrome, advanced Parkinson's disease, and severe cerebral palsy. 

For these conditions, medical practitioners would certify the diagnosis itself, without the current requirement to document detailed functional impairments. For example, podiatrists may now certify walking impairments, and physiotherapists can certify additional types of restrictions.

Planning considerations

• Families should consider reviewing DTC eligibility where a qualifying condition exists.
• DTC certification unlocks access to the Registered Disability Savings Plan (RDSP), which remains one of the most powerful long term planning tools for families with a disabled dependent. Maximum lifetime benefits are $70,000 - $90,000, depending on household income. If you are unsure whether you or a family member is eligible for this plan, contact your advisor.

7) Financial crime measures and consumer protection 

The Update advances several anti-fraud and financial crime measures, building on previously announced commitments to stand up a Financial Crimes Agency and a National Anti-Fraud Strategy. Notable items include:

• A ban on Cryptocurrency ATMs: Operating a cryptocurrency ATM is now classified as a criminal offence. The Canadian Anti-Fraud Centre has identified crypto ATMs as a primary tool used by fraudsters; in 2024, reported losses through these machines totaled $14.2 million.
• Expanded FINTRAC powers: The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) was granted broader authority to refuse, revoke, or prevent re-registration of non-compliant Money Services Businesses, along with increasing criminal record check requirements.
• A cap on NSF fees (already in effect): The government capped non-sufficient fund (NSF) fees at $10 per incident for personal deposit accounts at all federally regulated banks and credit unions, effective March 12, 2026. Previously, these fees ran as high as $45–$50. The government estimates this will save Canadians more than $600 million annually. 

The cap is accompanied by two additional consumer protections: no NSF fee can be charged more than once within a two-business-day window on the same account, and no NSF fee applies at all when the account shortfall is under $10.

Note that provincial credit unions and business/corporate accounts are outside the scope of these rules.

Planning considerations:

• These measures do not directly affect tax planning, but they strengthen consumer protections for our clients and their families. Canadians under the age of 35 are statistically the most frequent targets of financial fraud, while Canadian retirees tend to face the largest losses when they are targeted. 
• We always encourage families across all age groups to consider basic safeguards: trusted contact authorizations, consolidated banking, low balance/fraud alerts, and clear protocols for any large or unusual transfer requests.
• For clients with digital asset exposure, we recommend using regulated platforms and appropriate custody arrangements.

8) Fiscal outlook and the path forward 

The Update maintains a two-track fiscal framework:

• The gradual elimination of the operating deficit (day-to-day program spending) over three years.
• A continued capital deficit to fund nation-building infrastructure, housing, defence, the new Canada Strong Fund, and other major projects.

Even under this framework, the federal government projects deficits of more than $50 billion per year through 2031. That backdrop is important context for long term planning. If GDP and economic growth do not scale with or above the cost of deficit investments there will be pressure to raise revenues from other sources (e.g. personal and corporate income tax, wealth taxes, changes to the principal residence exemption, etc.). 

Planning considerations

• Sustained deficits and rising debt servicing costs increase the probability of future tax increases, especially for higher incomes, corporate investment income, or estates.
• We favour planning approaches that build flexibility and diversification of tax treatment across registered, non-registered, corporate, and trust accounts, rather than concentrating planning around any one assumption about future rates.

Our Role 

Tax and financial planning remain core to our advisory process. We will continue to monitor how the Spring Economic Update 2026 measures are implemented and what they may mean for your specific circumstances. Where appropriate, we will coordinate with your accounting and legal advisors to ensure decisions are aligned and planning opportunities are not missed.

If you have any questions about how the Update may affect you, your advisory team is available to provide guidance.