Canada Tax Update — Week Ending May 31, 2026
Top 3 Changes
1. Ontario small business tax cut is now enacted
Ontario Bill 97 received Royal Assent. The Ontario small business corporate tax rate drops from 3.2% to 2.2% effective July 1, 2026. CCPCs with Ontario small business income should review instalments and year-end tax projections.
2. Quebec zero-rates certain food and hygiene products for QST
Quebec announced certain food items and hygiene products will be zero-rated for QST effective July 15, 2026. Retailers should update POS systems, product tax codes, and invoices before the effective date.
3. BC PST expansion to professional services remains a major compliance issue
BC confirmed PST will apply to certain professional services at 7% effective October 1, 2026, including accounting, architectural, engineering/geoscience, security, and non-residential real estate services. Affected firms should assess registration, contracts, billing templates, and client notices.
Itemized Changes
Ontario — Small Business Corporate Tax Rate
Status: Enacted
Effective: July 1, 2026
Ontario’s budget legislation has received Royal Assent. The small business CIT rate reduction from 3.2% to 2.2% is now enacted. For taxation years straddling July 1, 2026, the rate should be prorated.
Affected: Ontario CCPCs claiming the small business deduction.
Recommendation: Update 2026 corporate tax projections, instalments, and dividend planning.
Quebec — QST Zero-Rating
Status: Administrative / announced measure
Effective: July 15, 2026
Quebec announced QST zero-rating for certain food and hygiene products. This affects retailers, wholesalers, and businesses selling affected products in Quebec.
Affected: Retailers, pharmacies, grocers, e-commerce sellers, and POS system users.
Recommendation: Review SKU-level tax coding before July 15, 2026.
BC — PST on Professional Services
Status: Proposed / administrative guidance issued
Effective: October 1, 2026
BC issued guidance on the expansion of PST to certain professional services. This is relevant even for Ontario firms if they provide taxable services into BC.
Affected: Accounting, architecture, engineering/geoscience, security, and non-residential real estate service providers.
Recommendation: Review BC client files, engagement letters, invoicing systems, and PST registration obligations.
Federal — Disability Tax Credit Access
Status: Administrative
Effective: 2026 tax year
Finance Canada highlighted measures to improve access to the Disability Tax Credit. For 2026, the DTC amount is $10,341, providing a federal tax reduction of up to $1,448.
Affected: Individuals with disabilities, caregivers, and families supporting eligible dependants.
Recommendation: Review potential DTC eligibility before filing or amending returns.
Deadlines — Next 60–90 Days
June 15, 2026 — Self-employed individuals and spouses/common-law partners must file 2025 T1 returns. Any balance owing was still due April 30, 2026.
July 1, 2026 — Ontario small business tax rate reduction begins.
July 3, 2026 — First quarterly Canada Groceries and Essentials Benefit payment.
July 15, 2026 — Quebec QST zero-rating for certain products begins.
October 1, 2026 — BC PST expansion to certain professional services begins.
Advisor’s Recommendations
Ontario CCPCs should revise 2026 tax estimates now, especially if the year-end straddles July 1, 2026. Retailers selling in Quebec should update POS tax settings before July 15. Professional firms with BC clients should review whether PST registration and billing changes are required before October 1.
