2025 Federal Budget Highlights

Alison Cannell
Nov 5
3 min read

Overview

The 2025 Budget focuses on:

Stimulating economic growth through targeted investments
Maintaining fiscal responsibility
Helping Canadians adapt to global economic and technological shifts

Key Tax and Policy Measures

Personal Tax Measures

Personal Support Workers Tax Credit: 5% refundable credit (max $1,100 per year) for eligible workers (2026–2030).
Automatic Tax Filing for Low-Income Canadians: CRA will automatically file returns for qualifying non-filers starting with 2025 tax year (effective 2026).
Top-Up Tax Credit: Ensures no taxpayer loses out due to the personal rate cut (first bracket falls from 15% → 14% by 2026).
Home Accessibility Tax Credit: No double-claiming of expenses under both Home Accessibility and Medical Expense credits (from 2026).
Canada Carbon Rebate (CCR) Wind-Down: Final payment April 2025; program ends October 2026.
Extended EI Parental Benefits for Bereavement: Adds 8 weeks of support after a child’s death.
Early Retirement Options for Frontline Public Servants: Includes firefighters, border agents, and parliamentary officers.
Canada Disability Benefit Enhancement: One-time $150 supplemental payment per certification; non-taxable and retroactive.
Deferral of Bare Trust Reporting: Implementation postponed to tax years ending after Dec 31, 2026.

Other Tax Measures

Cancellation of Capital Gains Tax Increase and Entrepreneurs Incentive
Registered Plan Investment Simplification (2027): RDSPs can hold shares in small business or venture capital corporations; certain limited partnerships no longer qualify.
21-Year Trust Rule Strengthened: Closes loopholes involving indirect trust-to-trust transfers.
Improved CRA–ESDC Information Sharing: To address worker misclassification.
Elimination of Underused Housing Tax (UHT): Effective 2025 (onward no UHT filing or payment).
Ending Luxury Tax on Aircraft and Vessels: Effective immediately; vehicle tax remains.
Eliminating GST for First-Time Home Buyers: No GST on new homes up to $1 million; partial rebate to $1.5 million.

Corporate Measures

Productivity Super-Deduction: Accelerated capital cost write-offs to spur business investment.
- Immediate expensing for clean energy, manufacturing, R&D, zero-emission assets, etc.
- Gradual phase-out 2030–2033.
- Expected to reduce corporate tax burden and boost competitiveness with the U.S.
Limits on Corporate Tax Deferral: Prevents deferral via mismatched year-ends within corporate groups.

Summary

Budget 2025 blends short-term affordability measures with longer-term productivity and housing initiatives.

Key themes include:

✅ Support for essential and low-income workers

✅ Targeted tax relief for first-time homebuyers

✅ Simplification of compliance and registered investment rules

✅ Incentives for clean technology and business innovation

✅ Elimination of several taxes viewed as inefficient (UHT, luxury tax on boats/aircraft, carbon rebate)

Article provided by Mackenzie Estate and Tax team

The comments contained herein are a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. This blog was prepared by Alison Cannell, for the benefit of Alison Cannell, Financial Advisor with Cannell Wealth Management Inc., a registered trade name with Investia Financial Services Inc., and does not necessarily reflect the opinion of Investia Financial Services Inc. The information contained in this blog comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability.

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