Federal Budget 2025

This week, the Federal Government tabled its 2025 Budget, outlining a range of measures aimed at supporting economic growth, simplifying compliance, and providing clarity on previously proposed tax changes.

This year’s budget highlights include the continuation of accelerated capital cost allowance incentives, the deferral of bare trust and NPO reporting requirements, and the elimination of the Underused Housing Tax. While some measures build on earlier announcements, others introduce meaningful changes for businesses, organizations, and individual taxpayers alike.

At Noseworthy Chapman, our team has closely examined the 2025 Federal Budget to identify the measures most likely to impact our clients and community. We’ve summarized the key highlights, updates, and insights to help you understand how these changes may impact your personal and business finances in the year ahead.

Accelerated CCA– Several new and extended accelerated capital cost allowance (CCA) measures would apply to capital asset acquisitions, including:

• immediate expensing for manufacturing and processing buildings;
• immediate expensing for productivity-enhancing assets (class 44, 46 and 50), including computers and systems software;
• reinstatement of the accelerated investment incentive, with phase-out beginning in 2030; and
• reinstatement of accelerated CCA for manufacturing or processing machinery and equipment, clean energy generation and energy conservation equipment and zero-emission vehicles.

Bare Trust Filing Deferral – The Government confirmed its intent to proceed with the August 15, 2025 proposals, subject to further modifications following consultations. However, the reporting requirements for bare trusts would be deferred to taxation years ending on or after December 31, 2026. No filings for bare trusts would be required for the 2025 taxation year.

Expanded NPO Reporting Requirement Deferral – The Government confirmed its intent to proceed with expanded reporting requirements for NPOs, including basic filings for smaller NPOs and regular filing requirements for entities with receipts over $50,000. However, this proposal would be deferred to apply for taxation years beginning on or after January 1, 2027, rather than commencing for 2026.

Underused Housing Tax (UHT) cancellation– The UHT would be eliminated as of the 2025 calendar year. No UHT would be payable and no UHT returns would be required for the 2025 and subsequent calendar years. Filing obligations, penalties and interest for prior periods would remain in place.

Intercorporate dividends– In certain situations, a new rule would suspend dividend refunds that would normally be received on dividends paid to affiliated corporations.

Clean Energy Sector – Various modifications to incentives related to the clean economy were proposed.

Automated Personal Tax Filing – The government would begin automatically filing tax returns for certain low-income Canadians starting with the 2025 taxation years. Filing would begin in 2026.

Capital Gains Inclusion Rate and the Canadian Entrepreneurs’ Incentive – The government has confirmed the cancellation of the proposed increase to the capital gains inclusion rate and the Canadian entrepreneurs’ incentive.

Previously Announced Measures – The government stated that it intends to proceed with several previously announced measures, including the capital gains rollover on small business investments, making the Canada carbon rebate for small businesses tax-free, allowing charitable donations made in early 2025 to be claimed in 2024 and increasing the lifetime capital gains exemption limit to $1,250,000 effective in 2024.

You can read the full 2025 Federal Budget commentary below: