After weeks of raising expectations among small business owners, Thursday’s federal budget is a big let down, says the Canadian Federation of Independent Business (CFIB).
“While there is a reannounced Mega Deduction and a focus on mega projects, small business owners will find the 2026 budget mega disappointing,” said Dan Kelly, CFIB President. “If you are a small business owner struggling to keep your business going in the face of rapidly rising costs and a trade war, the budget will provide you with no help whatsoever.
“Small business owners are looking for tax reductions and tariff relief, and the budget provides neither. I find it appalling that, a year and a half into the trade war, the government hasn’t even bothered to fix the failing tariff relief measures. The budget speech says government will be at the side of Canadian businesses for as long as it takes. Sadly, this remains untrue as small firms with less than $1 million in sales do not qualify for any of the existing tariff support programs, despite Canada having collected more than $14 billion in counter-tariff revenue.”
The CFIB is Canada’s largest association of small and medium-sized businesses with 103,000 members across every industry and region.
Expanded Mega Deduction
On the positive side, the CFIB said the budget focuses on the expanded Mega Deduction and enhances Small Business Rollovers, both of which are good measures to help with small business investments. There are also several tax simplification measures that build on earlier announcements to reduce the red tape burden by $2 for every $1 of new regulatory costs.
The new Canadian Growth Incentive (CGI) contains a promising $15 million capital gains exemption, which if properly designed, could be a significant catalyst for investments in small businesses, it added.
“The CGI has a lot of potential to help address the decline in business starts that Canada has been facing in recent years,” said Kelly. “But, as usual, Ottawa has decided to limit the initiative by adding a bunch of complicated rules which result in excluding about half of the businesses that could otherwise use it. It makes absolutely no sense that a family farm, a hotel, restaurant, forestry or fishing business, engineering firm or arts/entertainment business would be excluded. CFIB strongly supports the spirit of this proposal, but will immediately lobby to simplify it by including all sectors covered by the Lifetime Capital Gains Exemption.
“While the government is introducing some helpful measures that focus on tax simplification and regulatory reduction, small businesses appear to remain in the government’s blind spot. And as Canada’s debt grows close to $1.4 trillion, it is critical that we look at new approaches to stimulate business creation and small business growth to help get us out of this mess.”
Measures to benefit Canada’s restaurant industry
Restaurants Canada said it supports the federal government’s efforts in Budget 2026 to strengthen Canada’s economy, encourage business investment and address affordability pressures facing Canadians.
It said the Budget includes measures with the potential to benefit Canada’s restaurant industry, including incentives for capital investment, efforts to simplify the tax system, affordability supports for Canadians, and commitments to better align immigration programs with much needed regional labour market needs.
“Restaurants are an essential part of Canada’s economy, supporting 1.2 million jobs as the country’s fourth largest employer, purchasing $30 billion annually from Canadian food and beverage producers, and supporting communities across the country,” said Kelly Higginson, President and CEO of Restaurants Canada. “We support the government’s focus on building a stronger, more competitive Canadian economy, and it is important that restaurants are recognized and included as these initiatives move forward.”
While the budget presents opportunities, their effectiveness will depend in part on how programs are designed and implemented. This is particularly true for the restaurant industry of which 98% are small businesses. Operators continue to face significant cost pressures, with 67% reporting lower profitability than a year ago, said Restaurants Canada.
“A strong economy needs strong local businesses and access to the workforce required to support growth,” added Higginson. “We look forward to working with the federal government to support these efforts to strengthen Canada’s economic prosperity.”
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