Tax Planning

Canada’s Shift to Make Life More Affordable: Tax Planning Implications

With Bill C-4 and related measures in force, Canadian taxpayers need to reorient tax planning around changes to personal rates, fuel taxes, and benefits.

By NomadicTax Research Team • 5-8 min read • June 25, 2026

## Overview of Canada’s Affordability Measures The Canadian government passed **Bill C-4**, *Making Life More Affordable for Canadians Act*, which achieved Royal Assent on **March 12, 2026**. ([canada.ca](https://www.canada.ca/en/department-finance/news/2026/03/legislation-to-make-life-more-affordable-receives-royal-assent.html?utm_source=openai)) Key changes include: - Lowering the **lowest personal income tax rate** from 15% to 14.5% for 2025, and to **14.0% for 2026 onward**. ([canada.ca](https://www.canada.ca/en/department-finance/services/publications/report-impact-reducing-lowest-marginal-personal-income-tax-rate-non-refundable-tax-credits.html?utm_source=openai)) - Renaming and expanding the **GST/HST credit** into the **Canada Groceries and Essentials Benefit**, with increased payment amounts beginning July 3, 2026. ([canada.ca](https://www.canada.ca/en/revenue-agency/news/2026/04/canada-groceries-and-essentials-benefit-one-time-top-up-payment-to-make-groceries-and-other-essentials-more-affordable-is-coming-june-5.html?utm_source=openai)) - Temporarily reducing federal excise taxes on fuel to **zero cents per litre** for certain fuel types from April until September 2026. ([canada.ca](https://www.canada.ca/en/revenue-agency/services/tax/technical-information/excise-taxes-special-levies/excise-taxes-special-levies-notices/etsl82-proposed-temporary-rate-reductions-excise-tax-on-certain-types-fuel.html?utm_source=openai)) --- ## Tax Planning Implications ### 1. Income Tax Rate Reduction - Reducing the first marginal rate impacts how **non-refundable tax credits** (e.g., Canada Employment Amount, Age Amount) are calculated. The “report on the impact” confirms multiple credits will be affected by this lower rate. ([canada.ca](https://www.canada.ca/en/department-finance/services/publications/report-impact-reducing-lowest-marginal-personal-income-tax-rate-non-refundable-tax-credits.html?utm_source=openai)) - If you are close to the first bracket’s upper limit, assess whether **income shifting**, **deferral**, or **splitting** remains beneficial under slightly lower rates. ### 2. Enhanced Credits & Benefits - The transition from GST/HST credit to **Groceries and Essentials Benefit** increases benefit payments and simplifies eligibility. Useful for lower-income households managing essential costs. ([canada.ca](https://www.canada.ca/en/revenue-agency/news/2026/04/canada-groceries-and-essentials-benefit-one-time-top-up-payment-to-make-groceries-and-other-essentials-more-affordable-is-coming-june-5.html?utm_source=openai)) - If you were previously ineligible for one or the other, reevaluate your benefit eligibility when filing your 2025 and 2026 returns. ### 3. Fuel Excise Tax Relief - Businesses that use large volumes of gasoline, aviation fuel, diesel, or aviation gasoline benefit immediately from the **temporary 0¢/L excise tax**. This can lower operating costs for transportation, agriculture, and aviation sectors. ([canada.ca](https://www.canada.ca/en/revenue-agency/services/tax/technical-information/excise-taxes-special-levies/excise-taxes-special-levies-notices/etsl82-proposed-temporary-rate-reductions-excise-tax-on-certain-types-fuel.html?utm_source=openai)) - Ensure you track fuel purchase dates — relief applies only between **April 20 and September 8, 2026**. Purchases outside those dates may not be exempt. --- ## Actionable Strategies - If you are a **business** in Canada relying heavily on fuel, plan purchases to maximize use during the relief period. - For **individuals**, explore whether any shareable expenses (fuel, travel) can be accelerated to benefit from relief wherever legal. - For those in income planning or investing, model scenarios under the new rates and benefits to optimize tax or cash-flow strategies. - Keep records: proof of fuel delivery dates, eligibility for benefits, and income sources. --- By understanding where and when the tax reliefs apply, Canadian taxpayers can make smarter decisions in 2026 to keep more of what they earn.