Fall budget expected to bring targeted tax breaks for entrepreneurs, not broad tax reform

Ottawa is expected to announce targeted tax incentives for entrepreneurs and small businesses in its second federal budget under Prime Minister Mark Carney. The budget is scheduled to be unveiled on Nov. 5. The Globe and Mail reported that expectations are building for such measures.

Many economists and business groups have called for a major overhaul of Canada's tax system to boost growth and investment. Signals from Ottawa, however, suggest narrowly focused tax breaks are more likely than broad tax reform.

Rebekah Young, an economist at Scotiabank and a former Finance Department official, released a report outlining expectations for the budget. She said Ottawa may move on tax incentives aimed at entrepreneurs. She does not expect immediate broad-based changes to consumption, personal or corporate tax rates.

Scotiabank also expects possible capital-gains incentives for Canadian startups. Capital gains are profits from selling assets such as shares. The bank also anticipates tax changes aimed at keeping Canadian entrepreneurs in the country.

A campaign called Bet on Canada, organized by the Council of Canadian Innovators and CVCA and backed by more than 100 business leaders, is calling for the return of the Canadian Entrepreneurs' Incentive. That measure was proposed in the 2024 budget and would offer lower capital-gains rates to startup founders.

The Canadian Federation of Independent Business said cutting the small business tax rate tops the list of priorities for entrepreneurs ahead of the fall budget. The group also named fixing gaps in tariff relief among its top priorities.

Ottawa has already announced $36 billion over five years for a Productivity Mega Deduction. The deduction allows businesses to write off the full cost of eligible capital investments immediately. The Globe and Mail has reported that startups with lower revenues may not benefit much from it, because they do not have income tax to deduct against.

The budget is also not expected to have much wiggle room, meaning little fiscal space for new spending or tax cuts. The Globe and Mail pointed to tax breaks on gasoline and the recently announced mega deduction as the reasons.

On the federal books, Reuters reported that Canada's budget deficit over the first four months of the 2026/27 fiscal year slightly fell to C$5.14 billion.