On November 5, 2026, the Government of Canada released Budget 2026, Masters of Our Destiny, outlining investments and policy commitments aimed at expanding Canada’s AI infrastructure, supporting adoption across the economy and the public service, and promoting the responsible development of emerging technologies.[1]

Building on Canada’s National AI Strategy, AI for All, launched in June 2026 with an initial investment of $2.7 billion, the budget includes several measures relevant to Canadian AI developers, businesses and investors.[2] The budget also reports that the share of Canadian firms using AI has more than tripled since 2024, increasing from 6.1% to 19.2% in 2026.[3]

Building Canada’s sovereign AI infrastructure

Budget 2026 announces plans to enable Canadian AI companies to access 500 megawatts (MW) of sovereign AI computing capacity. The government intends to use financial tools, including backstops and offtake agreements, to attract private investment and expand domestic computing infrastructure.[4]

The announcement responds to growing demand for computing capacity, with large technology companies securing significant portions of available resources through long-term agreements, making it increasingly difficult for smaller Canadian companies to access the computing power needed to develop and deploy AI technologies.[5]

This builds on Budget 2025’s plans to advance large-scale sovereign AI data centre projects in Canada.[6] The budget also highlights private investments, including Bell Canada’s planned 1.2-gigawatt AI infrastructure hub in Saskatchewan, which represents $52.5 billion in capital investment and is expected to support more than 4,500 jobs.[7] According to the budget, more than 200 data centre projects are currently in the pipeline across Canada.[8]

For AI developers and infrastructure investors, these measures could create opportunities in data centre development, energy infrastructure and computing services. Details regarding the proposed financial arrangements, eligible projects and allocation of computing capacity remain to be announced.

Supporting Canadian AI champions and accelerating adoption

Budget 2026 highlights several previously announced initiatives, including an equity investment of up to $1.6 billion in Canadian AI company Cohere, intended to strengthen Canada’s sovereign AI capabilities and support the creation of at least 1,000 high-paying technical jobs by 2030.[9]

The budget also references two announcements made at the ALL IN Conference in Montréal in September: a joint Canadian-German investment of $150 million and €100 million, respectively, in Montréal-based LawZero to advance the development of safe and trustworthy AI, and support for a Canadian-led open-source consortium involving Mila and Mozilla to improve access to AI tools for small- and medium-sized businesses.[10]

Beyond these previously announced commitments, Budget 2026 proposes an additional $1 billion over six years, beginning in 2028-29, for the Strategic Response Fund to support large-scale research, development and innovation projects in sectors including AI.[11]

The budget also highlights the Productivity Mega Deduction, which provides immediate expensing for a broader range of eligible capital assets, including certain technology-related investments, reducing the after-tax cost of investing in new technologies.[12] The new Canada Growth Incentive capital gains exemption and rollover measures for investments in small businesses announced in the budget are also aimed to spur investment in the Canadian ecosystem.[13]

Preparing Canada’s workforce for an AI-driven economy

The budget highlights a previously announced $162 million investment over five years in Mitacs to support 10,000 co-funded work placements for post-secondary students, recent graduates and post-doctoral fellows. The placements are intended to help Canadian businesses integrate AI technologies while providing participants with practical experience.[14]

The initiative forms part of the government’s broader objective of creating up to 90,000 AI-related work and placement opportunities by 2031.[15]

The government also intends to provide students at Canadian universities, colleges and CEGEPs with access to trusted AI agents, with further details expected before the end of 2026.[16]

AI comes to the public service

Budget 2026 confirms the establishment of Digital Transformation Canada, a new federal organization that will bring together Shared Services Canada and the Canadian Digital Service to lead the adoption of AI and other emerging technologies across the public service.[17]

The budget proposes approximately $1 billion over five years, beginning in 2026-27, for a Government Transformation Fund to support major federal IT projects, as well as $17.6 million over five years for a fellowship program recruiting private-sector technical experts. The government also intends to introduce the Digital Transformation Canada Act to establish a legislative framework for the delivery, governance and management of federal digital and IT services.[18]

AI tools are already being deployed across the public service. The budget notes that GCtranslate has translated more than 400 million words which are then personally reviewed by civil servants, CANChat supports more than 26,000 chats per month, and Canadian-developed AI from Cohere is being deployed across the public service.[19]

These initiatives, together with the government’s Buy Canadian Policy, could create additional procurement opportunities for Canadian technology suppliers.[20]

AI safety and regulation remain on the agenda

Budget 2026 does not propose a successor to the Artificial Intelligence and Data Act (AIDA), which died on the Order Paper. Instead, it highlights targeted initiatives addressing AI safety, online harms, privacy and international cooperation.[21]

Bill C-34, the proposed Safe Social Media Act, introduced in June 2026, would impose obligations on regulated social media and AI chatbot services, including requirements to assess and mitigate risks associated with harmful content, label synthetically generated content and provide users with accessible tools to report harmful content.[22]

Bill C-36, also introduced in June 2026, would enact the Protecting Privacy and Consumer Data Act, strengthening privacy protections, particularly for children, and increasing transparency regarding the use of personal information in automated systems.[23] The budget also contemplates expanding data portability rights to sectors including telecommunications and air transportation.[24]

To oversee the proposed regimes, the budget proposes $176.3 million over five years, beginning in 2026-27, and $29.3 million annually thereafter to establish a Digital Safety and Data Protection Commission of Canada.[25]

The budget also proposes $6.2 million over four years, beginning in 2027-28, to support Canada’s continued participation in the Global Partnership on Artificial Intelligence.[26] Internationally, Canada intends to explore the establishment of a new body, potentially a Technology Stability Board, to develop shared AI safety standards, assess advanced AI models and coordinate responses to emerging risks.[27]

The road ahead

Budget 2026 places particular emphasis on expanding sovereign computing capacity, supporting Canadian AI companies and increasing public-sector adoption, while maintaining a focus on AI safety and privacy.

While several initiatives build on previously announced commitments, the budget introduces additional measures aimed at expanding computing capacity and supporting AI-related innovation. Their impact will depend on how these measures are implemented, including the availability of funding and access to domestic computing resources. AI literacy, training and responsible governance also remain key to businesses and customers not only developing trust in the adoption and use of AI but also in bridging the productivity gap, a central objective previewed in last year’s federal budget.

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If you have any questions or would like to further discuss the implications of Budget 2026 for your business, please contact one of the authors or a member of Gowling WLG’s Artificial Intelligence Group.


[1] Government of Canada, Masters of Our Destiny – Budget 2026 (November 5, 2026), [Budget 2026]. For a broader analysis of the budget, please also see Federal budget 2026: Tax measures in a time of transformation.

[2] Government of Canada, Canada’s National Artificial Intelligence Strategy: AI for All (June 4, 2026), Budget 2026 at 271. For more on the AI for All Strategy, please also see Canada's new AI strategy puts adoption and trust in the spotlight: Naïm Antaki discusses the path forward on BNN Bloomberg.

[3] Budget 2026 at 78.

[4] Ibid at 273.

[5] Ibid at 272.

[6] Ibid.

[7] Ibid at 78, 119.

[8] Ibid at 78.

[9] Ibid at 272.

[10] Ibid at 271-72.

[11] Ibid at 118.

[12] Ibid at 27, 111. Please also see Understanding Canada’s new "Productivity Mega Deduction": Broad-based, immediate, and permanent expensing.

[13] For details on these measures, please see Federal budget 2026: Tax measures in a time of transformation.

[14] Ibid at 271.

[15] Ibid.

[16] Ibid at 272.

[17] Ibid at 296-97.

[18] Ibid at 297.

[19] Ibid at 23, 298.

[20] Ibid at 23, 24.

[21] Ibid at 255, 270-73, 275.

[22] Ibid at 270-71.

[23] Ibid at 52, 275. For more on Bill C-36, please see Understanding Bill C-36: What organizations need to know about Canada’s proposed privacy reform bill.

[24] Ibid at 143.

[25] Ibid at 52, 271.

[26] Ibid at 272.

[27] Ibid at 273.