The federal authorities will desk its 2026 federal finances subsequent week on November 5 and there’s no scarcity of concepts which have been put ahead by varied particular curiosity teams, assume tanks, people and companies. Actually, this yr, the Home of Commons Standing Committee on Finance obtained 1,355 briefs as a part of its annual pre-budget consultations , and, in case you’re so inclined, you may learn every of them on-line.
The committee summarized its suggestions in a report offered to Parliament in late September, which contained 130 suggestions. Of those, solely seven of them associated to taxation. However the first one, recommending broad-based tax reform , stands out.
The committee really helpful that the federal government “undertake a complete overview of Canada’s tax system to enhance productiveness, financial progress, and competitiveness by progressively decreasing taxes on work, financial savings, entrepreneurship, and funding, whereas evaluating fiscally impartial reforms that place better reliance on consumption-based taxation and supply enhanced protections for low-income Canadians by way of refundable tax credit and focused earnings helps.”
They’re not the one ones asking for tax reform. This week, the Chartered Skilled Accountants of Ontario (CPA Ontario), the provincial regulatory physique , echoed this advice, and is main a nationwide coalition in calling for complete tax reform.
This follows CPA Ontario’s Oct. 2025 report, Tax Reform for Progress in Canada , during which it laid out the case for tax reform, together with varied suggestions. The group is hoping {that a} full overview of our tax system will take into account a “revenue-neutral shift within the tax combine, decreasing reliance on economically dangerous taxes (e.g. earnings tax) whereas increasing the position of consumption taxes.”
CPA Ontario is urging the federal government to simplify the general tax system by eliminating area of interest tax expenditures that add complexity with out clear financial profit, capping the mixed high marginal private earnings tax price at 50 per cent, decreasing the variety of private earnings tax brackets and higher aligning earnings bracket thresholds with our OECD friends “to retain and entice expertise.”
Listed below are just a few of the extra fascinating private tax suggestions culled from varied pre-budget submissions.
Simplified tax credit score
Among the many suggestions contained in The Progress Crucial: The C.D. Howe Institute’s 2026 Shadow Price range, can be the introduction of a simplified private earnings tax credit score. This concept was a part of the Institute’s ‘ Large Bang’ Tax Reform undertaking , launched in early 2026.
Based on the Institute, this new elective non-refundable simplified tax credit score would “scale back complexity and enhance transparency” by changing quite a few present deductions and credit. The simplified credit score quantity can be set at $10,000 and added to the present fundamental private quantity, which is presently $16,452. Because of this, people may earn greater than $26,000 tax-free.
This new, simplified credit score can be elective. Tax filers may select to both declare the $10,000 simplified credit score or retain entry to all present credit by forgoing it.
A restricted set of focused measures would stay throughout the simplified system, together with: the essential private quantity (together with any unused quantity transferred from a companion or baby), the brand new simplified tax credit score, Canada Pension Plan/Québec Pension Plan and Employment Insurance coverage contribution credit, incapacity and caregiver credit, the charitable donation credit score, and federal dividend and international tax credit.
On the deductions facet, those that elected the simplified credit score would nonetheless be capable to deduct registered retirement financial savings plan (RRSP) and registered pension plan contributions, spousal assist paid, CPP/QPP on self-employment earnings, 50 per cent capital positive aspects inclusion and choose employment and business-related deductions.
However, in return for claiming the simplified credit score, taxpayers would forgo different provisions, together with: pension earnings splitting; the employment credit score; union {and professional} dues; childcare bills; shifting bills; the lifetime capital positive aspects exemption; the schooling credit score; age and pension credit; the volunteer firefighter credit score; residence accessibility and residential consumers’ credit; medical bills and refundable medical complement, amongst just a few others.
The Institute added that by decreasing line objects and eligibility calculations, the simplified choice would ease the tax submitting burden for a lot of Canadians, decrease their compliance prices and facilitate tax-filing automation by tremendously growing the variety of folks with fundamental tax returns. This might additionally assist with the authorities’s efforts to broaden automated tax-filing choices for low-income Canadians. The Institute expects greater than 90 per cent of filers would select the simplified credit score fairly than itemizing particular person deductions and credit, which may finally “curb the tendency of elected officers to introduce narrowly focused tax preferences as instruments for political acquire or broad coverage goals, fostering a extra impartial tax system .”
An analogous proposal by the Joint Committee on Taxation of The Canadian Bar Affiliation and CPA Canada was submitted final month. That committee really helpful three prescribed normal private quantities (single, married/common-law and an age 65 complement) in lieu of a specified group of present non-refundable tax credit.
Indexation of assorted private and enterprise tax quantities
In August, the Society of Belief and Property Practitioners (Canada) really helpful that the federal authorities overview and replace varied greenback thresholds within the Revenue Tax Act that haven’t been listed to inflation for many years. Inflation has considerably lowered their actual worth. Examples embody the registered incapacity financial savings plan contribution restrict (caught at $200,000 since its introduction in 2008), the international property threshold for T1135 reporting requirement functions (set at $100,000 since 1998) and the baby care expense limits of $8,000 for youths underneath age 7, and $5,000 for kids aged 7 to 16 (unchanged since 2015).
Retirement financial savings plans
Lastly, within the space of retirement financial savings, the Convention for Superior Life Underwriting (CALU) has proposed a number of measures to modernize Canada’s registered saving regimes. Particularly, CALU is asking on the federal government to replace the registered plan guidelines to raised assist the monetary wants of these saving for retirement and retirees by permitting unused RRSP contribution room to be yearly listed to partially compensate for the lack of tax deferred financial savings because of delayed contributions ensuing from different monetary priorities.
CALU would additionally wish to see the age at which RRSP contributions could be made to be prolonged to age 75 from 71, and equally defer the requirement to transform an RRSP to a registered retirement earnings fund (RRIF) to age 75. It additionally really helpful modifying RRIF payout necessities by permitting RRIF holders to exclude as much as $180,000 (listed yearly to inflation) from the applying of the RRIF minimal fee formulation till a person reaches the age of 85.
The Canadian Discussion board for Monetary Markets (CFFiM) went even additional in its pre-budget submission, recommending that the RRSP restrict be elevated to 30 per cent of earned earnings from 18 per cent, lifting the present most annual contribution room to $56,350 from $33,810. It argued that the 18 per cent cap dates again to 1992 and rests on demographic and financial assumptions that at the moment are outdated.
It additionally needs the RRSP to RRIF conversion age elevated to 74, since life expectancy at 74 at this time (13.9 years) is roughly equal to life expectancy of 71 in 1992 (13.7 years), when the fashionable RRIF calculation was set. The CFFiM can also be calling for obligatory RRIF minimal withdrawal charges to be eradicated altogether.
