The federal government's 2026 budget includes tax incentives for farm machinery purchases, expanded provisions for transferring family farms, and measures aimed at improving access to financing and strengthening Canada's agricultural supply chain.
Tabled Thursday by Finance Minister François-Philippe Champagne, the budget confirms the previously announced Productivity Mega Deduction, allowing farmers to immediately write off 100% of the cost of eligible capital investments acquired on or after Sept. 15, 2026. Eligible equipment includes tractors and combines, along with certain farm structures.
The government says the measure will encourage investment and improve productivity by reducing the tax burden on new capital purchases.
The budget also proposes expanding tax-deferred intergenerational transfers of qualifying farm property to include nieces, nephews, grandnieces and grandnephews, effective Jan. 1, 2027. However, agricultural businesses are excluded from the government's new Canada Growth Incentive, which offers eligible investors an exemption on up to $15 million in capital gains.
Other measures include proposed amendments to the Canadian Agricultural Loans Act to improve financing access, facilitate farm transfers and reduce administrative costs for producers and lenders. Ottawa also wants to streamline tax deferrals for livestock producers affected by drought, flooding and excessive moisture, allowing faster designation of eligible regions.
Meanwhile, the budget reinforces the government's $3.2-billion National Food Security Strategy, announced earlier this year, which includes $1 billion in financing through Farm Credit Canada to expand food processing capacity, alongside funding for food production and innovation.
The budget proposes another $124 million over three years, beginning in 2027-28, to renew the Local Food Infrastructure Fund, supporting food banks and community food infrastructure.
The government also plans to modernize regulations governing seeds, fertilizers, feed and veterinary products, while pursuing investments in transportation infrastructure and export diversification.
The budget forecasts a federal deficit of $62.3 billion for 2026-27.
