Budget 2026: Key tax updates for Canada’s energy industry

Budget 2026 includes expansion of clean economy ITCs and the critical mineral tax credits, reduced withholding on TCP and other tax measures

On November 5, 2026, Canada’s Minister of Finance and National Revenue, François-Philippe Champagne, tabled the Liberal Government’s second budget, Masters of our Destiny, in the House of Commons (Budget 2026).

Among other things relevant to the Canadian energy industry, Budget 2026 proposes the following tax measures:

• an extension of the clean electricity investment tax credit (CE ITC) and clean technology investment tax credit to eligible property that is acquired and becomes available for use before 2041, and an expansion of the CE ITC to certain high-voltage intra-provincial transmission projects, complementing the existing CE ITC eligibility of certain inter-provincial transmission property. The CE ITC would be available in respect of eligible high-voltage intra-provincial transmission property (which excludes buildings, electricity distribution equipment and property used for international transmission) that is acquired and available for use on or after November 5, 2026;
• a five-year extension of the critical mineral exploration tax credit (CMETC) and the mineral exploration tax credit to apply to flow-through share agreements made on or before March 31, 2032, and the inclusion of antimony as a critical mineral eligible for the CMETC;
• the simplification of withholding and remittance rules when non-residents dispose of “taxable Canadian property” (TCP), by reducing the applicable withholding and remittance rates where the non-resident seller of TCP is a corporation and exempting fully tax-deferred section 85 transfers of TCP from the withholding and remittance requirements of section 116 (provided that the required section 85 election form (CRA Form T2057 or T2058) and notification to the Canada Revenue Agency are filed within 30 days of the disposition);
• an expansion of the previously-proposed exception to the “excessive interest and financing expenses limitation” rules for interest and financing expenses incurred by a borrower on borrowed funds used by the borrower to carry on a Canadian regulated energy utility business, so that the exception would also apply where borrowed funds are used by another entity in the same related or affiliated group (or a partnership in which the group holds at least a 40% interest). Budget 2026 also proposes to expand the definition of a “Canadian regulated energy utility business”;
• allowing helium exploration and development expenses to qualify as Canadian exploration expense and Canadian development expense and allowing costs incurred to acquire helium resource properties to qualify as Canadian oil and gas property expense; and
• amendments to the federal excise tax regime for gasoline, diesel fuel and aviation fuel under the Excise Tax Act to reduce the risk that the same fuel is taxed more than once as it moves through the supply chain.

For a discussion of these tax measures and others in Budget 2026, please see McCarthy Tétrault’s 2026 Canadian Federal Budget Commentary – Tax Initiatives.