Federal Budget 2025

General Kim Franz 13 Nov

On November 4, 2025, the Federal Government presented the 2025 Federal Budget, titled “Canada Strong”. There are a number of significant measures that will affect businesses, including immediate expensing for manufacturing and processing buildings, an increase to the expenditure limit for the Scientific Research and Experimental Development (SR&ED) program, and certain clean energy input tax credits.

Additional measures in the Budget include the removal of the Underused Housing Tax, the elimination of the luxury tax on certain aircraft and vessels, and a deferral of the trust reporting requirements for bare trusts to 2026. Also announced were new rules to expand on the anti-avoidance measures relating to the 21-year anniversary of a trust, as well as anti-avoidance rules for the deferral of tax on investment income using tiered corporate structures.

The measures introduced in the Budget are proposals and not all of the announcements may be enacted into legislation. There is still uncertainty as to whether the proposals will ultimately be implemented as outlined in the Budget documents as well as the timing of when they will be effective.

Full details of Budget can be found by clicking here. Summarized below are a few of the items we believe are most relevant to private companies and individuals.

Business Tax Measures

Corporate income tax rates

No changes to the corporate income tax rates are proposed. As such, the income tax rates as of January 1, 2025, will remain as follows:

BC Combined (Federal and BC)
General 12% 27%
Small business1 2% 11%
1For the first $500,000 of taxable active business income and subject to meeting other requirements.

Immediate expensing for manufacturing and processing buildings

Currently, eligible buildings in Canada used to manufacture or process goods for sale or lease (manufacturing or processing buildings) are prescribed an annual tax deduction rate of ten per cent (capital cost allowance). The Budget proposes immediate expensing (100% tax deduction) for the cost of eligible manufacturing or processing buildings. This includes the cost of eligible additions or renovations made to such buildings. The incentive is available in the first taxation year that the eligible property is used for purposes of manufacturing and processing of goods for sale or lease, and requires that at least 90% of the floor space of the building is utilized for these functions.

This benefit is for eligible property acquired on or after November 4, 2025 and before 2030. The rate of depreciation is reduced to 75% for 2030 and 2031, to 55% for 2032 and 2033, and then after 2033 the enhanced rate will no longer be available.

Tax deferral through tiered corporate structures

The Budget proposes anti-avoidance provisions relating to the deferral of tax on investment income with a corporate structure that has entities with staggered taxation year-ends. The proposed rules would suspend the dividend refund of a payor corporation upon payment of a taxable dividend if the recipient corporation’s balance due date for the taxation year in which the dividend was received ends after the payor corporation’s balance due date for the year in which the dividend was paid.

The corporate tax refund will be suspended until a payment is made by a corporation in the chain to individual shareholders, or to companies which have less than a 10% share ownership or are not under common control (i.e., corporations that are not “connected”). To accommodate genuine commercial transactions, the rule would not apply to a dividend payor that is subject to an acquisition of control where it pays a dividend within 30 days before the acquisition.

The rules will apply to dividends paid in taxation years that begin on or after November 4, 2025.

Enhancement of Scientific Research and Experimental Development (SR&ED) Tax Credits

The expenditure limit qualifying for the higher investment tax credit rate of 35% is proposed to be increased to $6M annually. This is a significant change from the proposed $4.5M limit announced in the 2024 Fall Economic Statement. The increased limit applies retroactively to taxation years beginning on or after December 16, 2024.

Certain proposals from the 2024 Fall Economic Statement were also confirmed by the government in that there is still an intention to implement the changes. This includes the enhanced investment tax credit rate of 35% (versus the lower 15%) being available to small Canadian public companies and larger private corporation groups, based on taxable capital. Previously, the higher rate was only available for Canadian-controlled private corporations. The phase out of the higher rate begins at $15M of taxable capital (increased from $10M) amongst an associated group, and is eliminated at $75M (increased from $50M). Certain capital expenditures used in SR&ED will qualify for a 100% deduction. Further, the budget contains a plan for an elective pre-claim approval process for vetting of SR&ED projects in advance by the CRA, with a targeted review time of 90 days.

Critical Mineral Exploration Tax Credit (CMETC) and Canadian Exploration Expense (CEE)

The budget expands the eligibility for the CMETC (which is equal to 30% of specified mineral exploration expenses incurred in Canada and renounced to flow-through share investors) for the following criterial minerals: bismuth, cesium, chromium, fluorspar, germanium, indium, manganese, molybdenum, niobium, tantalum, tin, and tungsten. This applies to expenditures renounced under eligible share agreements entered into after November 4, 2025 and on or before March 31, 2027. Starting November 4, 2025, the budget also clarifies that expenses incurred for purposes of determining the quality of a mineral resource do not include expenses relating to determining the economic viability or engineering feasibility of the mineral resource.

Personal Tax Measures

Personal Income Tax Rates

There were no changes to the personal income tax rates except for a decrease to the lowest federal tax bracket from 15% to 14.5% for 2025, and to 14% for 2026 and later taxation years. The lowest federal tax bracket of 14.5% for 2025 applies to taxable income of up to $57,375.

B.C.’s top personal income tax rates for 2025 continue to be as follows:

Personal Top Marginal Rates (Income above $259,830)
Interest and regular income 53.50%
Capital gains 26.75%
Eligible dividends 36.54%
Non-eligible dividends 48.89%
Note: The tables shown above represent the combined Federal/BC Provincial personal tax rates. 

Home Accessibility Tax Credit

Applicable to 2026 and subsequent taxation years, expenses claimed under the Medical Expense Tax Credit cannot also be claimed under the Home Accessibility Tax Credit. The Home Accessibility Tax Credit is a non-refundable tax credit that applies at the lowest personal income tax rate on up to $20,000 of eligible home renovation or alteration expenses per calendar year.

Canadian Entrepreneurs’ Incentive

The Budget affirms that the elimination of the proposed capital gains inclusion rate increase would result in the removal of this proposed measure.

Personal Support Workers Tax Credit

The Budget proposes to introduce a temporary credit which would provide eligible personal support workers working for eligible health care establishments with a refundable tax credit of 5 percent of eligible earnings, providing a credit value of up to $1,100. The person must ordinarily provide one-on-one care and essential support to optimize and maintain another individual’s health, well-being, safety, autonomy, and comfort, consistent with that individual’s health care needs as directed by a regulated health care professional or a provincial community health organization. The person’s main employment duties must include helping patients with activities of daily living and mobilization. The Budget states that amounts earned in BC are not considered eligible earnings.

Alternative Minimum Tax (AMT)

The Budget confirms that the government intends to proceed with proposed legislation relating to the AMT, including one measure that would restrict the deduction of investment counsel fees (portfolio management fees) to 50% of the expense for purposes of calculating the AMT.

Other Tax Measures

21-year anniversary rules for trusts

The anti-avoidance provisions relating to the 21-year anniversary deemed disposition rules for trusts are proposed to be expanded to include indirect transfers of trust property to other trusts, effective on or after November 4, 2025. These measures are intended to address tax planning that avoid the deemed disposition to beyond the 21-year timeframe, including cases where trust property is transferred on a tax-deferred basis to a corporate beneficiary that is owned by a newly settled trust.

Trust reporting requirements for bare trusts

The Budget confirms the government’s intention to proceed with proposed draft legislation as it relates to reporting requirements for bare trusts, however the rules are now proposed to become effective for taxation years ending December 31, 2026 or later. Therefore, bare trusts are not required to file T3 trust income tax returns for the 2025 tax year.

Luxury tax on aircraft and vessels

The Budget will cease the luxury tax on subject aircraft (with a value over $100,000) and vessels (with a value over $250,000) after November 4, 2025, but will remain applicable to vehicles costing over $100,000.

Carry back rule for estates

One proposal announced in Budget 2024 was to extend a loss carry back for qualifying estates from the first taxation year, to the first three taxation years instead. The Budget provides that this will proceed with retroactive effect to deaths on or after August 12, 2024.

Underused Housing Tax (UHT)

The UHT will be repealed entirely for the 2025 taxation year and onwards. As a result, no UHT would be payable and no UHT returns would be required to be filed.

Automatic tax filing for lower-income individuals

The Budget proposes to provide the CRA with discretion to file a tax return on behalf of lower-income individuals for 2025 and onwards. Eligible individuals include those that have a taxable income below the federal basic personal amount or provincial equivalent (for 2025, the federal amount is $16,129), where all of the income of the individual is from sources for which specified information returns (such as a T4 slip) have been filed with the CRA, and the individual has otherwise not filed a tax return within 90 days following the filing deadline for the year. The individual then has 90 days to review the processed filing by the CRA and submit any changes, or may opt-out of automatic tax filing.

Previously announced tax measures reaffirmed

The Budget confirms that the government intends to proceed with certain previously announced tax measures including: capital gains rollover on Small Business Investments, Substantive Canadian Controlled Private Corporations, exemptions for Employee Ownership Trusts, Excessive Interest and Financing Expenses Limitation Rules, Lifetime capital gains exemption changes, and other rules.

For more information on how any of the proposed changes may have on your business or you, contact your Rise Advisor.

Your Business. New Heights.

Rise CPA provides professional accounting, tax and business advice to help you make the right decisions at the right time. Since 1979, we’ve been helping clients create businesses and lifestyles they envision by delivering expert insights and financial guidance. At Rise, we excel at advising business owners and their families in a caring and personal way. Our services cover a wide range of Tax Planning, Auditing, Accounting, Estate Planning, and Business Advisory. Please call (604) 936-4377 or use the online contact form to book an appointment with one of our accounting professionals.

Written by Rise Advisors

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Calgary to be Canada’s top real estate market amid transitionary 2026, report says

General Kim Franz 13 Nov

PwC also anticipates the growth of prefabricated and modular homes in 2026, provided the financing options adapt.

Real estate is expected to be in transition next year as companies look to find new sources of growth, with Calgary’s market emerging as a particular bright spot, according to a PwC Canada report.

The report, completed in partnership with the Urban Land Institute (ULI), said there will be a shift to rental properties in Canada’s two largest real estate markets.

“In Toronto and Vancouver, the condo reset is steering capital to rental, including asset classes like student housing. Leaders in 2026 will be companies who partner widely, adopt technology confidently and get creative in how they structure and finance deals,” Richard Joy, executive director of ULI Toronto, said in a release. “But Calgary remains a standout, with policy agility and supply delivery driving momentum.”

PwC said Calgary’s strong economy, record-breaking housing construction over the past three years and strong population growth are reasons why the city should have the strongest market next year.

Outside Calgary, PwC expects Canada’s real estate landscape to be in “transition” for 2026 because rental construction is expected to climb as developers take advantage of funding programs and pivot their projects to rental properties from condos.

“Canadian real estate is at a pivotal moment — policy momentum is building, and the sector’s ability to collaborate across industries is opening doors to new opportunities,” Fred Cassano, a partner and national real estate leader at PwC Canada, said.

“Addressing the construction shortage is essential, as its impact ripples across every asset class, from housing to retail and industrial. By embracing new approaches and partnerships, we have a tremendous opportunity to build the spaces our communities need and unlock growth throughout the market.”

PwC also anticipates the growth of prefabricated and modular homes in 2026, provided the financing options adapt.

During the 2025 federal election, the Liberals promised $25 billion in debt financing and $1 billion in equity financing to developers of modular homes as part of their housing strategy.

In May, Ontario also earmarked $50 million for companies to expand their modular housing construction capacity.

Governments believe modular housing is a means of boosting housing supply, but the strategy has its skeptics. A recent Canada Mortgage and Housing Corp. report called modular housing “no silver bullet,” in part because many communities would rather hire local workers than ship a home from another city.

The PwC report also highlights private capital, such as real estate investment trusts and private debt, will fill the gap left by constrained traditional equity and bank debt.

“This shift is fuelling innovative business models and unlocking value in key growth areas like student housing, medical offices and other alternative sectors,” Cassano said.

As for commercial trends, PwC predicts medical offices will gain momentum as Canadians age, while increasingly dense cities are a boom for storage companies.

Written by Ben Cousins

Financial Post

Federal Budget Revamp, FY 2025-2026

General Kim Franz 4 Nov

Today, Finance Minister François-Philippe Champagne presented his first budget. Mark Carney was elected Prime Minister with a mandate to transform Canada’s economy and reduce its dependence on trade with the United States. The Carney government’s inaugural budget emphasizes structural changes to strengthen the domestic economy and boost non-U.S. exports, and it will be funded by an increase in government debt.

Carney, a former central banker who took office in March, has committed to decreasing reliance on the U.S. by increasing military spending, accelerating infrastructure projects, speeding up housing construction, and enhancing business competitiveness. Given the current large deficits and a rising debt-to-GDP ratio, the government cannot afford higher long-term interest rates. Carney has promised to build a stronger Canada using domestic resources and labour, noting that only 40% of the steel used in Canada is produced domestically, and he intends to change that.

Champagne has cautioned that the public service will need to shrink as the government strives to balance the budget in the coming years. Carney also faces a political challenge in convincing some opposition members to support his budget or at least abstain from voting against it. His Liberal Party caucus is currently three seats short of a majority in the House of Commons, meaning it cannot pass the budget on its own.

Unemployment remains high, economic growth is weak, and exporters, along with business investment, are still struggling due to U.S. tariffs. Carney and Champagne must persuade citizens that jobs, real wages, and living standards will eventually improve if they can stimulate both domestic and foreign investment.

Last week, the Bank of Canada indicated that it is nearing the limit of monetary stimulus it can provide without triggering inflation. Governor Tiff Macklem has consistently stated that he sees fiscal policy as a more effective tool to counter the adverse effects of the trade war, which he perceives as a negative supply shock.
The chart above indicates that Canada not only had the lowest deficit-to-GDP ratio in the G-7 but also among all countries with a triple-A credit rating. However, the rate at which we are issuing net new debt is expected to accelerate over the next year or two. Canada needs to assure the bond market that we will maintain our triple-A credit rating to keep financing costs manageable.

Ottawa has divided the budget into two parts: the operating budget and the capital spending budget. The operating budget covers the costs of running the federal government, which includes salaries, wages, rent, and interest payments on the debt. Carney has urged government leaders to review their operating budgets and eliminate unnecessary costs, which include downsizing the federal workforce.

A similar approach is used in countries like the United Kingdom and New Zealand, as well as by some provinces here at home. In principle, this shift could enhance transparency by allowing a better understanding of how public funds are allocated between day‑to‑day program spending and long‑term investments intended to boost future growth.

The capital spending budget is more complex because it’s harder to determine which expenditures will enhance growth and productivity. For instance, while the government is increasing defence spending to meet our NATO obligations, not all of it will contribute to productivity growth.

Ottawa’s agenda highlights major infrastructure projects, defence initiatives, housing, significant undertakings like pipelines, enhanced ports, and the development of the Ring of Fire. Federal leadership believes there is a role for industrial policy, as well as measures aimed at broad deregulation and tax competitiveness.
This year’s federal budget projects a deficit of $78.3 billion—nearly double the Liberals’ projection a year ago—prioritizing capital project spending over services. The deficit is expected to decrease gradually to $56.6 billion by 2029-30. Only a year ago, the Liberals forecast a 2025 budget deficit of $42.2 billion, but that was before trade uncertainty and tariff inflation hit our shores with the inauguration of Donald Trump last January.

The budget presents both downside and upside scenarios. In the downside scenario, ongoing trade uncertainty could worsen the budgetary balance by $9.2 billion annually, while the upside scenario anticipates a $5 billion annual improvement contingent on easing trade uncertainties.

Finance Minister François-Philippe Champagne emphasized the need for “generational” investments, allocating $25 billion to housing, $30 billion to defence, and $115 billion to infrastructure over the next five years. He criticized proposals to cap the deficit at $42 billion, advocating instead for investments to drive future growth.

The 2025 budget introduces a new format that separates capital and operational spending, with capital investments accounting for 58% of this year’s combined deficit. This shift aims to catalyze $500 billion in private-sector investment. However, we should be skeptical that such animal spirits will materialize quickly, given the immense uncertainty about the future of the Canada-Mexico-US free trade agreement.

The budget pledges to balance operational spending in three years.

Ottawa has been running a “comprehensive expenditure review” to spend less on the day-to-day operations of the federal government. According to the budget, that plan will save $13 billion annually by 2028-29, for a total of $60 billion in savings and revenues over five years.

The budget promises more taxpayer dollars will go toward “nation-building infrastructure, clean energy, innovation, productivity and less on day-to-day operating spending.” This “new discipline” will help protect social benefits, the budget promises.

The public service will see a drop of about 40,000 positions over the coming years. The budget projects it will have 330,000 employees in 2028-29, down from the 368,000 counted last year.

To confront an anemic economic picture, the government says it’s “supercharging growth” and vows to “make Canada’s investment environment more competitive than the U.S.”

To that end, the budget introduces a “productivity super-deduction” tax measure that will allow companies to write off a larger share of capital investments more quickly.

There are also new measures specifically for writing off expenses for manufacturing or processing buildings, as well as a new capital cost allowance for liquefied natural gas (LNG) equipment and related buildings.

Build Baby Build
Fast-tracking nation-building projects: In close partnership with provinces, territories, Indigenous Peoples, and private investors, the government is streamlining regulatory approvals and helping to structure financing.

Additional Cuts to Immigration
Selling it as Ottawa “taking back control” over an immigration system that has put pressure on Canada’s housing supply and health-care system, budget 2025 promises to lower admission targets.

The new plan proposes to drastically reduce the target for new temporary resident admissions from 673,650 in 2025 to 385,000 in 2026.

The 2026-28 immigration levels plan would keep permanent resident admission targets at 380,000 per year, down from 395,000 in 2025.

Ending Some High-End Taxes
The government is also proposing to undertake a one-time measure to accelerate the transition of up to 33,000 work permit holders to permanent residency in 2026 and 2027.

“These workers have established strong roots in their communities, are paying taxes and are helping to build the strong economy Canada needs,” the budget notes.

To fill labour gaps, the Liberals’ plan includes a foreign credential recognition action fund to work with the provinces and territories to improve transparency, timeliness and consistency of foreign credential recognition.

It would also launch a strategy to attract international talent, including a one-time initiative to recruit over 1,000 highly qualified international researchers to Canada.

In addition, there were billions of dollars in increased defence spending, the details of which are still sketchy.
Bottom Line

Nothing in this budget is surprising, as most of it has been telegraphed in recent weeks. The budget asserts that “the global trade landscape is changing rapidly, as the United States reshapes its economic relationships and supply chains around the world. The impact is profound—hurting Canadian companies, displacing workers, disrupting supply chains, and creating uncertainty that holds back investment. This level of uncertainty is greater than what we have seen in recent crises. Budget 2025 makes generational investments while maintaining Canada’s strong fiscal advantage—a foundation that allows us to invest ambitiously and responsibly, and build Canada’s economy to be the strongest in the G-7.”

Canada has the lowest net debt-to-GDP ratio among the G-7 and one of the smallest deficit-to-GDP ratios. Canada and Germany are the only two G-7 economies rated triple-A, a marker of strong investor confidence which helps keep our borrowing costs as low as possible. This is a time for bold actions to bolster Canada’s competitiveness. We have products the world needs. Hopefully, we can salvage a significant part of the trade agreement with the US, but the odds suggest we build the infrastructure necessary to trade our products worldwide.
Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres
drsherrycooper@dominionlending.ca