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      The Canadian government announced the 2026–2028 Immigration Levels Plan (the “Plan”) as part of Budget 2025. The Plan will stabilize permanent resident admission targets at 380,000 per year and significantly reduce temporary resident admissions, particularly among international students, from 2026 onward. The Plan also introduces targeted initiatives to allow certain temporary residents to transition to permanent residents over the next two years.1

      WHY THIS MATTERS

      Per the Immigration Levels Plan, the overall number of permanent residents will remain stable; however, Canada will see certain reductions in temporary resident admissions—specifically a 50% reduction for new international students.

      The Plan does place greater emphasis on maintaining and attracting higher-skilled talent.

      The Plan also emphasizes integration support for protected people and work permit holders transitioning to permanent residency.

      Background

      Previously, Canada's immigration system saw rapid growth in temporary residents, rising from 3.3% of the population in 2018 to 7.5% in 2024. The pace of arrivals strained housing, healthcare, and education.

      Prior permanent resident admissions were targeted at 395,000 for 2025, with temporary resident admissions exceeding 670,000. The Plan responds to concerns about sustainability, integration challenges, and labour market needs, as outlined in Budget 2025.

      Key Highlights of the Plan

      Permanent Resident Admissions

      Stabilized at 380,000 per year for 2026–2028 (down from 395,000 in 2025), with a higher share allocated to economic migrants—rising from 59% to 64%.

      Temporary Resident Admissions

      Total temporary resident admissions will fall from 673,650  in 2025 to 385,000 in 2026, and 370,000 in 2027 and 2028. Workers and students will constitute most new arrivals, with 230,000 worker permits and 155,000 student permits projected for 2026.

      Integration Initiatives

      • One-time recognition of eligible “Protected Persons” (approximately 115,000) as permanent residents over two years.

      • Accelerated transition of up to 33,000 work permit holders to permanent residency in 2026–2027. This may focus on senior managers and above who lost their “Arranged Employment” points earlier in 2025 in support of their permanent resident admissions.

      • Foreign Credential Recognition Action Fund ($97 million over five years) to improve credential assessment, focusing on health and construction sectors.

      International Talent Attraction

      Launch of the International Talent Attraction Strategy, including recruitment of over 1,000 top researchers, supported by up to $1.7 billion in targeted funding for research chairs, infrastructure, and mobility grants.

      Compliance and Program Delivery

      • Transfer of employer-focused compliance inspections under the International Mobility Program to Employment and Social Development Canada, streamlining oversight.

      • Adjustments to eligibility and cost-sharing in settlement and health programs for newcomers.

      Overall, Budget 2025 aims to modernize compliance across the International Mobility Program and Temporary Foreign Worker Program through digital integration, enhanced data sharing, and expanded employer oversight.

      KPMG INSIGHTS

      The announced measures reflect a deliberate move to rebalance immigration flows, prioritizing economic integration and long-term sustainability.

      The increased share of economic migrants and targeted support for credential recognition may help address persistent labour shortages, particularly in regulated professions. The permanent resident admissions changes could suggest that Canada’s long-term strategy will be more focused on economic streams, such as Federal High Skilled and Provincial Nominee Programs, creating opportunities for high-skilled professionals, business immigrations, and provincial nominees, which would support employers in Canada.

      Reductions in temporary resident admissions will likely heighten competition for work and study permits and require employers to plan more strategically for talent needs.

      Organizations employing temporary foreign workers may encounter selective approval processes and tighter program requirements, with a stronger focus on roles that demand higher skill levels and greater mobility.

      The decrease in international students is a result of the several changes the Canadian government implemented in 2024 to the international student program. Accordingly, educational institutions and related service sectors may see reduced international enrollment volumes.

      In light of the changes, the organisations may wish to consider taking these steps:

      • Review global mobility and workforce planning in anticipation of tighter temporary resident admission caps.

      • Assess eligibility and support for foreign employees seeking permanent residency under accelerated pathways.

      • Prepare for revised compliance procedures as employer inspections are consolidated.

      If assignees and/or their programme managers have any questions or concerns about the scope of the updated framework, its application and potential impacts, and appropriate next steps, they should consult with their qualified tax professional or a member of the GMS tax team with KPMG in Canada (see the Contact Us section).

      FOOTNOTE:

      1  Government of Canada, Budget 2025, published in November 2025.

      Contacts

      sonia-gandhi
      Sonia Gandhi

      Partner

      KPMG in Canada

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      * Please note the KPMG International member firm in the United States does not provide immigration or labour law services. However, KPMG Law LLP in Canada can assist clients with U.S. immigration matters.

      The information contained in this newsletter was submitted by the KPMG International member firm in Canada.

      GMS Flash Alert is a Global Mobility Services publication of the KPMG LLP Washington National Tax practice. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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