Corporate Tax Rates and Legislation: Q3 2026 Accounting Status

Issue 3 – Q3 2026 Accounting Status

• Legislative changes—July 1 to September 30, 2026
• Accounting updates—July 1 to September 30, 2026
• Federal and provincial/territorial bills—tabled or received royal assent in 2026
• Corporate income tax rates—accounting status (January 1, 2023 to September 30, 2026)

Legislative changes — July 1 to September 30, 2026

Legislative developments from July 1 to September 30, 2026 that affect income taxes, are outlined below.

Federal draft legislative proposals (2026 Spring Economic Update, 2025 federal budget and other proposals)

On July 23, 2026, the Department of Finance released draft legislative proposals to implement several 2026 Spring Economic Update (SEU), 2025 federal budget and other measures, and technical amendments. It also announced public consultations on these proposals. Key 2026 SEU, 2025 federal budget and other tax measures contained in the draft legislative proposals include:

• introducing simplified transfer pricing documentation rules effective for taxation years beginning after December 31, 2025 — the rules would apply in four scenarios involving small taxpayers and partnerships, small transfers of tangible property, small intragroup services transactions and small loans (see our Tax Insights “Canada introduces a simplified transfer pricing documentation regime”)
• eliminating the tax benefits arising from hybrid mismatch arrangements — this is an updated version of the second package of hybrid mismatch rules, which was initially released on January 29, 2026 (see our Tax Insights “Finance releases second package of hybrid mismatch rules” (August 7, 2026 update))
• reinstating accelerated capital cost allowance (CCA) for eligible liquefied natural gas (LNG) equipment and related buildings acquired after November 3, 2025 and first used before 2035 in certified low-carbon LNG facilities
• expanding the list of eligible uses for purposes of the carbon capture, utilization and storage investment tax credit to include enhanced oil recovery (at reduced rates)
• ensuring that, for taxation years of a foreign affiliate that begin after November 4, 2025, the investment income of a foreign affiliate on assets backing Canadian insurance risk be considered foreign accrual property income and therefore subject to taxation in Canada
• amending the definition of “deduction/non-inclusion arrangement” in respect of the “transitional CbCR safe harbour” under the Global Minimum Tax Act

Status: As at September 30, 2026, the draft legislative proposals have not been tabled as a bill in the House of Commons and, therefore, are not considered substantively enacted for Canadian GAAP or enacted for US GAAP.

Federal draft legislative proposals (Productivity mega deduction)

On September 15, 2026, the Department of Finance released draft legislative proposals to implement the newly announced “Productivity mega deduction,” which would permanently provide immediate expensing (i.e. a 100% first-year CCA deduction) for the cost of an expanded range of capital assets acquired after September 14, 2026. For more information, see our Tax Insights:

• “Federal tax measures to boost investments in Canada: permanent immediate expensing and faster rulings”
• “Canada’s Productivity Mega Deduction: Its application to mining companies”
• “Canada’s Productivity Mega Deduction: Accelerating capital cost recovery in the oil and gas sector”

Status: As at September 30, 2026, the draft legislative proposals have not been tabled as a bill in the House of Commons and, therefore, are not considered substantively enacted for Canadian GAAP or enacted for US GAAP.

Trade tariffs and government support

United States tariff policy is continuously shifting, and tariffs on certain goods imported from Canada remain in place across key sectors (i.e. aluminum, steel, automotive, copper, lumber, etc.). In late August 2026, the US Administration expanded its trade measures by imposing 50% tariffs on certain Canadian-origin dairy, alcoholic beverages, motor vehicles and a variety of other goods. Canada responded by imposing surtaxes on certain US-origin imports and increasing support for affected Canadian businesses and workers. The US Administration has also imposed an import ban of certain Canadian products, effective September 29, 2026. For more information on the current tariff situation and to help your business assess and manage these tariffs, visit our Tariffs and Trade Policy Resource Centre.

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Accounting updates — July 1 to September 30, 2026

Presentation of specific tax charges in International Financial Reporting Standard (IFRS) 18

In its July 2026 meeting, the International Accounting Standards Board (IASB) agreed to propose amendments to IFRS 18 Presentation and Disclosure in Financial Statements to classify a tax charge imposed by a government as a direct substitute for an income tax in the income taxes category of the statement of profit or loss. This would apply where legislation requires a company (or allows it to elect) to pay a specified tax charge instead of an income tax. The IASB expects to publish an Exposure Draft in the fourth quarter of 2026.

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Federal and provincial/territorial bills 

Table 1 lists key bills that include corporate income tax rate changes or other income tax changes (e.g. for research and development) that were:

• tabled or received royal assent during 2026, or
• tabled before 2026, but did not receive royal assent before 2026

Table 1: Federal and provincial/territorial bills

There were no changes in status from July 1 to September 30, 2026.

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Corporate income tax rates—accounting status (January 1, 2023 to September 30, 2026) 

The following information excludes Canadian-controlled private corporation small business rates and thresholds.

Table 2: Corporate income tax rates—accounting status
There were no changes in status from July 1 to September 30, 2026.

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