The federal budget outlines the government’s revenue estimates and expenditure priorities for the fiscal year. It is a key component of the parliamentary financial cycle. The outlook for budgetary revenues and expenses can be found in tables A1.9 and A1.10 of Budget 2026.
Figure 1 illustrates Budget 2026 revenues and expenses as a Sankey diagram. This diagram shows the flow of money by category of revenue and expense, where the width of each flow is proportional to its quantity. Revenue flows into the diagram from the left in the form of taxes and other revenues. Expenses flow out on the right side of the diagram in the form of transfers, program expenses, debt charges and other fiscal arrangements.
Figure 1 – Federal Government Revenues and Expenses, 2026–2027 ($ billions)
Source: Figure prepared by the Library of Parliament, 2026, using data obtained from Government of Canada, Masters of our destiny, Budget 2026.
Notes
Totals may not add up due to rounding.
1 “Other programs” revenues are affected by consolidated Crown corporation revenues, interest rates, inflation and exchange rate movements (which affect the Canadian-dollar value of foreign-denominated assets).
2 “Other fiscal arrangements” includes the Quebec Abatement (offsetting amounts to reflect the historical transfer of tax points and resulting reduction in federal tax collected for the Youth Allowances Recovery and Alternative Payments for Standing Programs); statutory subsidies; and payments for the transfer of Hibernia Net Profits Interest and Incidental Net Profits Interest net revenues to Newfoundland and Labrador. For 2026–2027, the combined adjustment is −$8.5 billion. It reduces the positive transfer components from $125.4 billion to $116.9 billion. In the Sankey diagram, the grey branch represents that reduction; it is not an additional transfer payment.
3 “Health agreements” corresponds to “health agreements with provinces and territories.”
Text Version
Overview of federal government budgetary revenues and expenses as set out in Budget 2026.
Estimated revenues for 2026–2027 total $540.3 billion. They comprise the following:
1. Income taxes, at $376.1 billion, which include
– Personal income tax, at $258.7 billion,
– Corporate income tax, at $102.7 billion,
– Non-resident income tax, at $14.8 billion.
2. Excise taxes/duties, at $70.2 billion, which include
– Goods and Services Tax, at $51.5 billion,
– Other taxes/duties, at $7.7 billion,
– Customs import duties, at $11.1 billion.
3. Other taxes, at $2.7 billion.
4. Other programs, at $37.0 billion.
5. EI premium revenues, at $34.3 billion.
6. Enterprise Crown corporations, at $13.0 billion.
7. Net foreign exchange, at $6.9 billion.
Estimated expenses for 2026–2027 total $602.6 billion and comprise the following:
1. Transfers to other governments, at $116.9 billion, which include
– Canada Health Transfer, at $57.4 billion,
– Equalization, at $27.2 billion,
– Social transfers, at $17.9 billion,
– Child care, at $10.3 billion,
– Territorial Formula Financing, at $5.8 billion,
– Community Stream, at $2.5 billion,
– Health agreements, at $4.3 billion,
– Other fiscal arrangements, reducing transfers by $8.5 billion.
2. Public debt charges, at $60.2 billion.
3. Net actuarial gain, reducing expenses by $0.4 billion.
4. Transfers to persons, at $153.4 billion, which include
– Elderly benefits, at $89.4 billion,
– Canada Child Benefit, at $31.2 billion,
– EI benefits, at $32.9 billion.
5. Direct program expenses, at $272.4 billion, which include
– Other program expenses, at $150.0 billion,
– Other transfer payments, at $122.4 billion.
Since estimated budgetary expenses will be greater than revenues, a deficit of $62.3 billion is projected for 2026–2027.
Budgetary Revenues
The breakdown of these revenue sources by component can be seen in the dark blue (leftmost) section of the diagram. Personal income tax revenues are the largest component, projected to account for about 69% of total income tax revenues (shown in light blue) and roughly 48% of total budgetary revenues for 2026–2027 (shown in the grey section of the diagram). Corporate income taxes are projected to account for about 19% of total budgetary revenues for the fiscal year.
The Goods and Services Tax (GST) is the largest component of the excise tax and duty revenues category. In 2026–2027, GST revenues are projected to account for approximately 73% of excise tax and duty revenues and 10% of total federal budgetary revenues.
Budgetary Expenses
Transfers to persons (the elderly, families with children and workers) are around 25% of total budgetary expenses for 2026–2027.
Health transfers (Canada Health Transfer and health agreements) are projected to represent about 10% of total budgetary expenses.
Budgetary Balance
The difference represents a projected budgetary deficit of $62.3 billion. This deficit represents about 10% of total budgetary expenses.
By Emmanuel Preville, Library of Parliament