On Tuesday, November 4th, the Minister of Finance and National Revenue, the Honourable François-Philippe Champagne, tabled the 2025 Federal Budget.

The budget’s overall theme was “Building a Strong Canada to Meet Today’s Challenges”. This budget presents an ambitious investment strategy that stimulates economic growth yet maintains a keen eye on responsible fiscal management. The Budget is designed for Canada to adapt to continuous transformations in the rapidly changing global environment, thereby better positioning itself to use its economic strengths to address current and future challenges.

The following sections detail the specific tax measures of most relevance to financial advisers and their clients.

Personal tax measures

Personal Support Workers Tax Credit

The province is implementing a refundable tax credit for personal support workers on a temporary basis. The Personal Support Workers Tax Credit will be 5% of eligible earnings, up to a maximum of $1,100 annually, from employment in a qualifying health care institution.

To be eligible, the worker must provide one-on-one caregiving and necessary support for care recipients, under the guidance of a designated regulated health professional or community health organization. Eligible earnings must be certified by the employer.

This measure applies from the 2026 to 2030 taxation years.

Automatic federal benefits for low-income Canadians

The Canada Revenue Agency will have authority to automatically file individual tax returns for certain low-income individuals who satisfy the requirement:
Income below the basic personal amount plus the age and/or disability amount, where applicable;
All income reported on information tax slips filed with the CRA;

A history of non-filing for at least one of the preceding three years; and

No return filed within 90 days of the deadline for the applicable year.

Opt-outs will be permitted. The provision takes effect for taxation years beginning in 2025, so automatic filings could start in 2026.

Top-Up Tax Credit to compensate for the middle-class rate reduction

Starting July 1, 2025, the first marginal tax rate was reduced from 15% to 14%. Following the reduction in the first marginal personal income tax rate, from 15% to 14.5% in 2025 and 14% in 2026, some taxpayers could face higher net tax liabilities when making large claims of non-refundable credits calculated at the lower rate.

Accordingly, the government will implement a Top-Up Tax Credit to ensure no taxpayer is in a worse position under the new regime; this, in substance, preserves a value of 15% for non-refundable tax credits against amounts in excess of the first tax bracket threshold ($57,375 in 2025). It shall be applicable on the 2025-2030 taxation years.

Home Accessibility Tax Credit

To avoid double-claiming, amounts claimed for the Medical Expense Tax Credit cannot also be claimed under the Home Accessibility Tax Credit.

This change applies for the 2026 and subsequent taxation years.

Canada Carbon Rebate wind-down

With the removal of the federal fuel charge as of April 1, 2025, the government provided a final quarterly CCR payment starting in that month. To complete the program, no CCR payments will be made for any tax return or adjustment request made after October 30, 2026.

Extending Employment insurance parental benefits during bereavement

Claimants receiving EI parental benefits will be able to access up to eight additional weeks of benefits in the case of the death of a child, which provides extra support for grieving parents.

Early retirement options for frontline public servants

Eligibility for early retirement under the Public Service Superannuation Act will be extended to more groups of frontline employees, including firefighters, border services officers and parliamentary protection officers.
They can retire with an unreduced pension after 25 years of actual service or at age 50 with a minimum of 25 years combined actual and deemed operational service, with at least 10 being actual service.

Improving access to the Canada Disability Benefit

The Canada Disability Benefit provides income support and security to persons with disabilities. From July 2025 to June 2026, the maximum amount of the benefit is $2,400 ($200 per month), to be indexed annually for inflation. The Budget confirms that the Canada Disability Benefit will not be considered income.

The government is providing a one-time $150 supplement payment for every Disability Tax Credit certification or re-certification that is linked to a Canada Disability Benefit entitlement. Supplement payments are anticipated to begin before the end of 2026-2027 and will be retroactive to the introduction of the Canada Disability Benefit.

Deferral of bare trust reporting requirements

Although the government previously announced enhanced trust reporting rules for taxation years ending on or after December 31, 2023, under the rules, all trusts (unless specific conditions are met) must file a T3 return, including Bare Trusts. Bare trusts were exempt from the enhanced reporting rules for both the 2023 and 2024 tax years. Further exemptions were also released in a draft legislation on August 15, 2025. To give more time to implement and comply with them, the new reporting rules for bare trusts were further deferred to apply to taxation years ending on or after December 31, 2026.

Business tax measures

Productivity Super-Deduction

The government is now proceeding with a series of measures aimed at accelerating capital cost write-offs and encouraging private sector investment. The centrepiece is a new Productivity Super-Deduction, permitting businesses to write off the full cost of an unusually wide range of investments more rapidly.

Key measures include:

• Restoring the Accelerated Investment Incentive, which provides enhanced first-year write-offs for most capital assets.
• Full expensing (100% first-year write-off) for manufacturing and processing machinery, subject to a phase-down from 2030 to 2033:
• Immediate expensing for clean energy and conservation equipment, zero-emission vehicles, and productivity-enhancing assets including patents, data network infrastructure, and computers.
• Full expensing for capital expenditures related to scientific research and experimental development, or SR&ED.

The government forecasts this super-deduction to reduce Canada’s METR by more than two percentage points, restoring competitiveness with the U.S. after the recent One Big Beautiful Bill Act (OBBBA). All these changes would apply to eligible property acquired on or after Budget Day.

Limiting tax deferral through tiered corporate structures

Some affiliated corporations were taking advantage of staggered fiscal year-ends to avoid paying taxes sooner by utilizing the early refund of the RDTOH. Basically, the unintended tax deferral opportunity has prompted the government to limit a corporate group’s ability to defer taxes on investment income. Under new rules, the refund of the RDTOH credit will be held back when a corporation pays a dividend to an affiliated corporation whose tax balance-due date falls after that of its own. The refund may be released no earlier than when the recipient corporation’s tax balance becomes due.

This will be the case for taxation years that begin on or after Budget Day; this measure will better align tax timing within corporate groups and reduce opportunities for intercompany deferral.

Other tax measures

Confirmation of previously announced measures

The government confirmed the cancellation of the previously proposed capital gains tax increase and the Canadian Entrepreneurs Incentive.

Simplifying registered plan investment rules

To simplify access to investments in the private markets for registered plans, the government will be streamlining and harmonizing the rules that govern qualified investments for RRSPs, RRIFs, TFSAs, RESPs, RDSPs, FHSAs, and DPSPs.

Under the new framework:

• RDSPs will be allowed to hold shares of specified small business corporations, venture capital corporations and eligible cooperatives
• Certain investments — such as interests in small business investment limited partnerships or trusts — will no longer qualify

These changes take effect January 1, 2027, and may modestly reduce access to private-market exposures within registered accounts.

Strengthening the 21-year trust rule

To prevent avoidance strategies that shift trust property indirectly to new trusts so as to avoid the 21-year deemed disposition rule, the government will extend the existing anti-avoidance rules to apply to indirect trust-to-trust transfers.

This measure applies to transfers occurring on or after Budget Day and assists in preserving the integrity of intergenerational trust planning.

Improved information sharing to address worker misclassification

The government will amend information-sharing provisions in order to permit the CRA to share taxpayer and confidential information with ESDC concerning worker misclassification, notably the misclassification of employees as independent contractors.

Removal of the Underused Housing Tax (UHT)

The UHT that was imposed annually on vacant or underutilized foreign-owned residential properties at a rate of 1% of the value of the property will be abolished for the calendar year beginning in 2025. There will be no UHT payable, and no returns will be required, for 2025 and onwards, although all filing and payment obligations remain for 2022 through 2024, including associated penalties and interest.

Abolish the Luxury Tax on aircraft and vessels

The federal government levies a tax on subject vehicles and subject aircraft having a value over $100,000 and subject vessels (such as boats) having a value over $250,000. The amount of the luxury tax is the lesser of 10% of the total value of the subject item, and 20% of the value of the subject item in excess of the relevant threshold. To reduce administrative complexity and enhance investment, Budget 2025 proposes to eliminate the luxury tax for aircraft and vessels, but the tax on high-value vehicles remains in place. All obligations under this tax will immediately cease after Budget Day. A final return is required to be filed for the reporting period that includes Budget Day.

Eliminating GST for first-time home purchasers

To make housing more affordable, the government will waive the GST on newly built homes selling for up to $1 million for first-time homebuyers. There will be a partial GST reduction for homes priced between $1 million and $1.5 million. This measure, which is included in Bill C-4, is expected to modestly help with new home construction and ownership in higher-cost regions.