04 Nov 2025 Federal Budget Highlights: Key Tax Measures for Businesses and Individuals

November 4, 2025

The Minister of Finance, François-Philippe Champagne, delivered the 2025 Budget (the “Budget”) this afternoon. Highlights of the tax measures announced in the Budget are summarized below.

Business Income Tax

Immediate Expensing of CCA on Eligible M&P Buildings

Buildings and additions/renovations to buildings that are used 90% or more for manufacturing and processing will be eligible to immediately expense the cost of the buildings in their first year of acquisition. This measure is effective for additions/purchases from November 4, 2025 to December 31, 2029. After 2029, the capital cost allowance rate decreases to 75% (2030 and 2031) and 55% (2032 and 2033) before going back to the regular 10% rate in 2034.

SR&ED Program

The Government confirms the changes to the Scientific Research and Experimental Development (SR&ED) that were previously announced in 2024. However, Budget 2025 increases the previously announced $4.5 million expenditure limit (to be eligible for a 35% SR&ED input tax credit) to $6 million/.

Part IV Dividend Refunds

The Budget proposes to limit the deferral of tax on investment income using tiered corporate structures with mismatched year ends so that the Part IV dividend refund would not be available until a later year (a year in which the recipient corporation has its Part IV tax due). There will be exceptions to this new rule for some bona fide dividend payments.

Personal Income Tax

Personal Support Worker Tax Credit

A new temporary Personal Support Workers Tax Credit, which would provide eligible personal support-workers working for eligible health care establishments with a refundable tax credit of 5 per cent of eligible earnings, providing a credit value of up to $1,100. This is for the 2026 to 2030 calendar years.

Top-Up Credit

The previously announced reduction in the lowest marginal tax rates to 14% resulted in some situations where a taxpayer’s non-refundable tax credits would be worth less, resulting in a net increase in taxation. This new Top-Up Credit for the 2025 to 2030 taxation years is to assist in ensuring that no person would be worse off as a result of the lowering of the marginal tax rates.

Registered Plans

The Budget proposed to simplify and harmonize the rules of what investments are qualified investments for the various types of registered investments plans to eliminate the differences.

Other Tax

Trust Reporting

The Budget proposed to defer the requirement for bare trusts to file a T3 Return until the 2026 year.

Underused Housing Tax (UHT)

The Budget proposed to eliminate the UHT program for the 2025 calendar year. Therefore, there will be no UHT returns required to be filed for the 2025 and subsequent years. UHT Returns are still required for the 2022 to 2024 years and previous penalties for failure to file are still applicable to those years.

Luxury Tax on Aircraft and Boats

The Budget proposed to eliminate the luxury tax on aircraft greater than $100,000 and boats greater than $250,000 effective today. The luxury tax of 10%/20% on autos greater than $100,000 has not changed.

Previously Announced Measures

• The Budget confirms the Government’s intention to proceed with several previously announced measures including, but not limited to:
• Increase in the Lifetime Capital Gains Exemption to $1.25 million of eligible capital gains
• Amendments to the trust reporting requirement (with deferral of bare trust rules as above)
• Reporting requirements for Non-Profit Organizations (deferred to 2027)
• Tax exemptions on sales to Employee Ownership Trusts and Worker Cooperatives
• Alternative Minimum Tax (AMT) amendments

What This Means for You

The 2025 Federal Budget introduces a mix of new incentives and compliance relief measures, particularly for manufacturing, innovation, and personal support workers.

If you’re uncertain how these changes affect your business or personal tax situation, Clearline CPA’s advisors can help you assess your exposure and plan accordingly. Contact us at reception@clearlinecpa.ca.