(Runtime: 5:00. Read the audio transcript.)
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The federal government’s first budget under Prime Minister Mark Carney introduced several tax measures but avoided major surprises, says Richard Chang, director of tax and estate planning with Canada Life.
“This is a fairly benign tax package,” he said. “There are certainly new measures related to individuals, trusts and business owners, but there’s no big surprises.”
Speaking on the Soundbites podcast shortly after the budget was tabled in the House of Commons, Chang said investors should pay attention to items that were dropped.
“Perhaps what’s most interesting in this budget is what’s been cancelled and excluded,” he said.
That includes:
- the Canadian Entrepreneurs Incentive, which would have provided up to $2 million in capital-gains exemption for qualified founders. The cancelation of this incentive “was actually buried in a footnote in the budget, rather than explicitly being called out .”
- the federal Underused Housing Tax is also being eliminated for 2025, though provincial and municipal rules may still be in effect across Canada.
- the luxury tax on aircraft and boats was removed, with speculation that administrative costs outweighed expected revenues.
- a promised one-year reduction to RRIF minimum withdrawals did not appear, and Chang says investors waiting for the change “now have clarity.”
- and no new wealth tax or significant increases to tax rates.
Chang characterized the budget as “fairly boring” from a tax perspective, with “no big alarms for a lot of investors.”
Enhanced reporting rules for bare trusts have been deferred again, this time until 2026.
“This will be the third time this has been deferred,” Chang said, noting it remains unclear when the requirements will ultimately come into effect.
The budget also expands anti-avoidance rules tied to the 21-year deemed-disposition rule, preventing indirect transfers of property to a new trust to bypass the rule.
Some business owners will be able to take advantage of a new allowance for the immediate expensing of manufacturing and processing buildings. The budget also reinstates accelerated investment incentives for machinery and equipment.
Both measures were introduced to encourage investments in manufacturing facilities in Canada, a response to similar measures implemented in the U.S. One Big, Beautiful Bill Act.
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This article is part of the Soundbites program, sponsored by Canada Life. The article was written without sponsor input.
This article is part of the Soundbites program, sponsored by Canada Life.
The article was written without sponsor input.