Canada's budget runs a $62.3 billion deficit and lets every business expense equipment at once

Finance Minister François-Philippe Champagne tabled Prime Minister Mark Carney's second budget on November 5, titled "Masters of Our Destiny." The Department of Finance's own tables put the 2026-27 deficit at C$62.3 billion, or 1.8% of GDP, down from the C$65.3 billion in April's Spring Economic Update. The deficit is then projected at C$62.5 billion in 2027-28 and C$57.6 billion in 2028-29, according to the budget documents. The same tables show the deficit narrowing to C$52.9 billion (1.3% of GDP) by 2030-31.

The number behind the number: the interest bill

The headline deficit is not the figure that should worry a lender. Public debt charges, the interest on the federal debt, are projected in the budget's fiscal tables to climb from C$60.2 billion this year to C$67.3 billion in 2027-28 and C$85.5 billion in 2030-31. That is a rise of C$25.3 billion in four and a half years, or about 42%. The Globe and Mail flagged the same C$85.5 billion figure and noted that Desjardins economists warned that persistently higher long-term rates or renewed trade escalation could push the debt onto an unsustainable path.

Ottawa argues the deficit is increasingly capital spending. The budget says the deficit will be fully accounted for by capital investment from 2027-28, and that day-to-day operating spending will balance with revenue that year, a year ahead of the schedule set in Budget 2025. Federal debt is projected at 39.9% of GDP in 2026-27 and 40.1% by 2030-31.

Two other details matter. The budget says developments since April improved the fiscal outlook by C$21.5 billion this year (C$27.5 billion for 2025-26), and the new Budget 2026 measures subtract C$15.2 billion this year and C$33.8 billion next year. In other words, the deficit looks smaller largely because revenue and spending forecasts improved, not because the budget spends less. The Globe reports C$151.5 billion in new spending over five years, offset by a C$158.3 billion improvement in the forecast.

What is in it for a business owner

The centerpiece for companies is the Productivity Mega Deduction. Eligible investments acquired on or after September 15, 2026 can be deducted immediately. Finance says about two thirds of capital assets now qualify, compared with roughly 15% before, and that the measure is permanent. It puts the marginal effective tax rate on new investment at 6.4%, against 13% before the measure. The department estimates it could add about C$22 billion a year to GDP and up to 80,000 jobs after ten years. Those are government projections, not outcomes.

For a restaurant buying C$80,000 of kitchen equipment, or a machine shop buying a C$250,000 CNC machine, the practical change is timing: the full cost comes off taxable income in the year of purchase rather than over several years. That helps a profitable firm. It does little for a business with no taxable profit this year, which is the situation many tariff-hit exporters are in.

Other measures aimed at smaller firms, per the Budget in Brief: a new tax exemption on up to C$15 million of capital gains from eligible investments in Canadian builders, a broader small-business rollover for capital gains, and a C$930 million expansion of SR&ED commercialisation support. Households get a one-time payment in early 2027 through the Canada Groceries and Essentials Benefit Supplement, equal to a 50% increase in the 2026-27 benefit.

Who is unhappy: the owners who do not invest

The Canadian Federation of Independent Business had asked for an across-the-board small-business tax cut. The budget does not include one, and CFIB president Dan Kelly told the Globe that most members will not benefit from the new investment credits, saying he felt "mega disappointed." Champagne had said before the budget that small businesses would see themselves in it. The gap between those two statements is the story for the roughly 98% of Canadian firms that Finance says are small or medium-sized: the biggest tax change rewards spending on assets, not profit or payroll.

Politically, Conservative Leader Pierre Poilievre called it a "credit card budget," and NDP leader Avi Lewis and Bloc leader Yves-François Blanchet also criticized it, per the Globe.

Cross-border trade and tariffs

The budget says Ottawa has provided nearly C$44 billion in tariff support so far, including C$10 billion for workers, C$12.9 billion for liquidity and financing (including the Business Development Bank of Canada's Pivot to Grow program and temporary deferrals of corporate income tax and GST/HST), and C$20.6 billion for firms pivoting and diversifying. The Globe reports C$11.5 billion over five years in the budget for industries and workers hit by the trade war, much of it previously announced. The Finance document also warns that the latest U.S. trade actions are expected to weigh on exports and that small and medium-sized firms have limited capacity to absorb lost export revenue.

The fiscal plan does not assume a deal with Washington. For a Canadian importer or an American exporter shipping north, nothing in the budget changes the tariff rates at the border. See our earlier coverage of the Section 338 tariff fight, Canada's 3.1% inflation reading and flat July GDP, which frame the backdrop for the Bank of Canada. A U.S. business selling into Canada should also watch the Canadian dollar, which sets the real price of the goods.

Bigger projects

The budget also seeds a C$25 billion Canada Strong Fund, a national sovereign wealth fund that would invest alongside private partners, and Today in BC reported C$6.5 billion over six years for forestry, plus an offer to sell a 15% stake in Trans Mountain to Indigenous groups. See also our report on Canada's pipeline plans.

What to watch

Whether the Bank of Canada treats a C$62 billion deficit as inflationary, how bond markets price the interest-cost path, and when the Mega Deduction legislation is drafted. Business owners considering equipment purchases should confirm eligibility and timing with an accountant. Numbers here are in Canadian dollars and come from budget projections, which change with the economy.

Sources: Department of Finance Canada, Budget 2026 (full budget, Budget in Brief, Economic and fiscal overview, Table 1 and fiscal tables); The Globe and Mail; Today in BC. This is market and policy information, not investment advice.