Canada would merge the RRSP and RRIF, raise instalment thresholds, and move tax day to May 15
The 2026 federal budget landed in the House of Commons on November 5, 2026, running 532 pages under the title Masters of Our Destiny.
Finance Minister François-Philippe Champagne set out $142.1bn in new measures over five years, with no change to personal or corporate income tax rates and no change to the capital gains inclusion rate, according to RBC Wealth Management.
Five measures bear directly on client files:
- An “RRSP for life” that would end the requirement to convert to a RRIF at age 71
- A deposit insurance limit of $250,000, with the limit removed entirely on eligible deposits in registered and tax-free accounts
- A new $15m capital gains exemption for founders, early-stage employees and investors in qualifying Canadian companies
- A single May 15 filing and balance-due date for all individuals, including the self-employed
- Higher tax instalment thresholds and a higher Form T1135 foreign property reporting threshold
RRSP for life
The requirement to convert a registered retirement savings plan (RRSP) into a registered retirement income fund (RRIF) in the year a client turns 71 would disappear under the budget.
Budget 2026 announces the government’s intention to merge the core features of the two plans under the Income Tax Act into a single vehicle it calls an “RRSP for life.”
Minimum withdrawal requirements after age 71 would not change.
The budget also proposes to let a surviving spouse or common-law partner become a successor holder of an RRSP, and to simplify tax-free transfers to qualified survivors after the account holder dies.
Two issues remain open, according to the budget document.
One is whether and how a successor holder feature could be built into the RRSP rules, which would permit the plan to stay open until the death of the surviving spouse or partner and keep the value of RRSP property out of the deceased’s income.
The other is whether the current indirect rollover provisions that apply on death, involving an income inclusion and an offsetting deduction for a qualifying survivor, could be replaced with direct tax-free transfers.
Merging the rules could require consequential changes to the federal Pension Benefits Standards Regulations, 1985 and similar provincial legislation, because funds transferred out of a pension plan are generally subject to locking-in restrictions and may have to be held in a locked-in RRIF or RRSP.
The Department of Finance Canada is accepting written representations on the proposal until January 8, 2027.
Doug Carroll, tax and estate specialist at Aviso Wealth, told The Globe and Mail the reform would not change the obligation to make minimum withdrawals after 71 and would instead spare Canadians the paperwork and hassle of converting the account.
Deposit insurance
The budget proposes to amend the Canada Deposit Insurance Corporation Act to raise the deposit insurance limit to $250,000 and remove the limit entirely for eligible deposits held in registered and tax-free accounts.
Temporary high-balance coverage would apply after certain life events, such as the sale of a home.
Budget 2026 would also legislate a review of the deposit insurance framework every 10 years and require provincial trust and loan companies seeking Canada Deposit Insurance Corporation (CDIC) membership to continue as federal trust and loan companies.
Canada Growth Incentive
Under the new Canada Growth Incentive (CGI), a Canadian-resident individual could claim an exemption on capital gains realised on the disposition of qualifying shares of a qualifying corporation, up to $15m. That limit would apply separately to each qualifying individual in respect of each business.
A qualifying corporation must be a Canadian-controlled private corporation at the time the share is issued, and the combined carrying value of its assets and those of related corporations must not exceed $100m immediately before and after issuance.
RBC Wealth Management notes that founders, early-stage employees and investors are the intended beneficiaries, that businesses in the financial, insurance, real estate, utilities, resource, accommodation and arts sectors are excluded along with professional practices and consulting firms, and that the measure would apply to qualifying shares issued on or after November 5, 2026 and before 2037.
Claiming the CGI exemption on shares of a corporation would limit a qualifying individual’s ability to claim the Lifetime Capital Gains Exemption on shares of that same corporation, and the reverse also applies.
The budget puts the cost at $715m in tax relief over four years starting in 2027-28, and says a founder with a $15m capital gain would retain nearly 96 percent of the value on exit, compared with 71 percent before Budget 2026.
“The CGI has a lot of potential to help address the decline in business starts that Canada has been facing in recent years,” said Dan Kelly, president of the Canadian Federation of Independent Business (CFIB).
Kelly added that Ottawa “has decided to limit the initiative by adding a bunch of complicated rules which result in excluding about half of the businesses that could otherwise use it.”
Filing and instalments
Budget 2026 proposes to change the T1 filing and balance-due dates to May 15 for all individuals, including self-employed individuals and their spouses or common-law partners, starting with the 2027 taxation year.
For taxation years beginning on or after January 1, 2028, the tax instalment threshold would rise from $3,000 to $7,500 for individuals resident outside Quebec and from $1,800 to $4,500 for Quebec residents, with both thresholds indexed to inflation.
RBC Wealth Management also flags an increase in the Form T1135 foreign property reporting threshold from $100,000 to $200,000 for taxation years ending after 2026.
“This is a very tax-focused budget, with the government acknowledging that many piecemeal rules require review,” said Ryan Minor, CPA Canada’s director of tax, of the fiscal plan released by the Department of Finance Canada.
