The budget is the second released by Prime Minister Mark Carney
Prime Minister Mark Carney delivered his second federal budget on Thursday, with measures aimed at bolstering the economy, reducing Canada’s reliance on the US, improving affordability, boosting Canadian arts and culture, and more.
Among them are several takeaways for legal professionals and the justice system.
New tax withholding requirements for individuals earning business income
The 2026 budget includes a slate of proposed changes to Canada’s tax system, including the much-discussed Productivity Mega Deduction that the federal government first introduced in September.
On Thursday, Ian Caines, a partner at Davies Ward Phillips & Vineberg LLP who specializes in tax law, noted a new development that could impact many lawyers: a proposal that individuals whose primary source of income is from a business – including professional or commission income – be allowed to pay a single instalment payment each year instead of quarterly payments.
The single instalment payment would make up two-thirds of their combined federal-provincial net tax owing for the year, and would be due on Dec. 31. Any remaining taxes would be due on the applicable balance-due date.
This measure would go into effect for the 2028 tax year.
Noting that the new measure would apply to many lawyers, including partners at law firms, Caines describes it as simpler and more beneficial than the current quarterly payment system.
However, “a lot of people probably won’t benefit if they’re earning their income through a corporation,” he says.
Funding for translating court rulings, dealing with Federal Court caseloads
In May, the Canadian Bar Association published a letter the organization had sent to the House of Commons’ finance committee regarding pre-budget consultations, asking the feds to provide “sustained, targeted funding” to the Courts Administration Service.
According to the CBA, the CAS – the body that provides administrative services to the Federal Court of Appeal, the Federal Court, the Court Martial Appeal Court, and the Tax Court of Canada – has operated under a structural funding shortfall for years, and has a cumulative deficit of about $35 million that must be repaid in 2028 and 2029.
The CBA specifically requested additional funding to address cybersecurity risks, a sharp rise in immigration cases, and the need for bilingual translation of court rulings.
Thursday’s budget addresses some of these concerns, proposing to devote $58 billion between 2026 and 2031 to reduce the translation backlog and support compliance with the Official Languages Act, help the Federal Court manage high caseloads, and complete work to modernize the infrastructure that supports the federal courts.
Funding to support victims of crime and reduce repeat offending
The budget aims to funnel $6 million in funding, over three years starting in 2027-28, to Justice Canada to bolster the Office of the Federal Ombudsperson for Victims of Crime. This funding would support the office’s work of reviewing complaints, identifying systematic issues, and advancing victims’ rights.
Over the same period, the budget would also allocate $30.9 million to Justice Canada to maintain intensive rehabilitative custody and supervision services, which provide treatment and rehabilitation for eligible young violent offenders to reduce repeat offending.
Another $12 million will go to Justice Canada to expand support for child advocacy centres. These centres provide trauma-informed services for victimized children, youth, and their families.
