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Proposed, checked 10 November 2026. Everything on this page comes from the Budget 2026 tax measures annex on budget.canada.ca. Each item is a proposal until Parliament passes it, and nothing here changes your 2026 return.
The budget has few measures aimed only at small business owners. This page picks the ones that matter to the self-employed, small corporations and people who earn commissions, and points to our longer pages where they exist.
Which proposals matter most to small businesses?
| Proposal | Who it touches | Our page |
|---|---|---|
| Instalment payment changes and the 2028 thresholds | Self-employed people and small corporations | Instalment payments and the 2028 thresholds |
| Longer period to reinvest in small business shares | Investors who sell eligible small business corporation shares | Growth incentive and capital gains exemption |
| Form T1135 thresholds doubled | Anyone with foreign property | Below |
| Fixed-dollar penalties raised and scaled by size | Everyone who files, including small businesses | Below |
| Commission expenses | Employees paid commission | Below |
| Tax debt shared with credit bureaus | Anyone who owes the CRA | CRA tax debt and credit bureaus |
What changes for Form T1135?
Today you file Form T1135 if the total cost of your specified foreign property is more than $100,000 at any time in the year. Specified foreign property generally means most income-earning property held outside Canada, other than personal-use property and property used in an active business. Budget 2026 proposes to raise the filing threshold from $100,000 to $200,000. The CRA would also raise the limit for the simplified reporting method from under $250,000 to under $500,000. The measures would apply to taxation years and fiscal periods that end after 2026.
The T1135 for the 2026 tax year still uses the current thresholds.
What changes for CRA penalties?
Several fixed-dollar penalties in the Income Tax Act have not been adjusted since they were enacted in the 1980s or 1990s, and one dates from 1927. Budget 2026 proposes to raise most of them to account for inflation. Older penalties would generally go up by a factor of two or three, depending on when they were enacted, and most recent penalties would stay as they are. The amounts would then be indexed to inflation once every five years.
Three further proposals are in the annex:
- Size scaling. Individuals and smaller corporations and partnerships keep the base fixed penalties. Medium corporations (more than $10 million and up to $50 million of taxable capital) would pay three times the base, and large corporations (over $50 million) eight times. For partnerships, medium means $2 million to under $10 million of gross revenue and large means $10 million or more.
- Repeated failures. A new penalty for repeated failure to file forms would generally double the base penalty. It would apply only if the person was penalized for the same kind of failure in any of the three previous years and did not fix the current failure after a CRA notice or demand.
- Other statutes. Most fixed-dollar penalties under the GST/HST rules in the Excise Tax Act and several other laws would also rise and be indexed.
The percentage-based late-filing penalty is not part of this change. For the rules in force now, see what happens if you miss the filing deadline.
What changes for commission employees?
Employees who earn commission can deduct employment expenses up to their commission income, but a commission employee who uses that rule cannot also deduct travel or vehicle costs under the general employee rules. Budget 2026 proposes to remove that restriction. A commission employee could then claim travel or vehicle expenses under the general provisions and still deduct other employment expenses up to the amount of their commission income. It would apply to the 2027 and later taxation years.
This is for employees on commission, not for the self-employed, who deduct business expenses on a different basis. See self-employed expenses for those rules.
Do other proposals matter to a small business?
Yes, a few. The flat-amount option for moving and tradespeople is covered in Budget 2026 Flat Amounts. The later T1 filing date proposed for the 2027 tax year is in May 15 Tax Filing Deadline. The annex also has corporate items such as interest deductibility limits, corporate loss transfers and tax elections. These mainly affect larger corporate groups, and we do not cover them here.
What should you do now?
Nothing needs to change in your 2026 filing or payments. If you hold foreign property, note your total cost during the year, because the new threshold would only help from the 2027 tax year. If you pay by instalments, keep following the schedule on Canadian tax calendar 2027. For the wider picture of the self-employed, see self-employed taxes in Canada.
How is this page kept current?
We re-read the annex when Parliament introduces legislation and move an item out of the proposal list when it becomes law. The full list of 2027 items is on Canadian Taxes in 2027.
This is an independent information site. It provides no services, does not represent the CRA, the Department of Finance or any organization, and collects information from open sources. It does not guarantee that anything here is accurate or current, and it accepts no liability for how you use it. It is not tax or legal advice. Check the official pages or a tax professional before you rely on a figure.
Frequently asked questions
Does Budget 2026 change the T1135 threshold?
It proposes to raise the filing threshold from $100,000 to $200,000 and the simplified reporting limit from $250,000 to $500,000, for years ending after 2026.
Are CRA penalties going up?
Budget 2026 proposes to raise most fixed-dollar penalties, generally by a factor of two or three for the oldest ones, and to index them every five years. It is a proposal.
Do small businesses pay the larger penalties for big corporations?
No. The proposal keeps the base amounts for individuals and smaller corporations and partnerships. Medium and large ones would pay three and eight times the base.
What changes for commission employees?
They could claim travel and vehicle costs under the general rules and still deduct other expenses up to their commission income, from the 2027 tax year.