Following the 2025 federal election, Canada’s Liberal Party has formed a minority government, ushering in a new wave of tax-related proposals that could significantly impact individuals and businesses. While many of these initiatives echo previous announcements, others introduce new incentives aimed at innovation, housing, and economic growth. Here’s a snapshot of key proposals worth watching:

Business Tax

• Reintroducing the Multi-Unit Rental Building (MURB) tax incentive, originally from the 1970s, to encourage home construction.
• Expanding tax credits for critical minerals, essential for defence, semiconductors, and clean technologies.
• Including technical studies (engineering, economic, feasibility) under Canadian exploration expenses for critical mineral projects.
• Modifying the clean technology manufacturing investment tax credit to cover brownfield site development and broaden the list of priority minerals.
• Extending the Carbon Capture, Utilization and Storage (CCUS) tax credit to 2035.
• Reinstating the accelerated investment incentive, allowing immediate expensing for clean energy and manufacturing equipment.
• Increasing the SR&ED tax incentive limit to $6 million for Canadian companies.
• Establishing a Canadian patent box, halving the corporate tax rate on income from qualifying intellectual property starting July 1, 2025.
• Expanding flow-through shares to include startups, enabling direct deductions for eligible R&D expenses.
• Introducing a 20% AI deployment tax credit for small and medium-sized businesses that can show job creation through AI adoption.

CRA and Compliance Measures

• Automatic tax filing for low-income households and seniors.
• Enhanced enforcement using technology to combat tax evasion and close loopholes.
• Increased penalties and fines, aiming to collect an additional $3.75 billion over three years.

Personal and Employment-Related Changes

For individuals:

• Reducing the lowest marginal tax rate by 1%.
• Eliminating GST on new homes up to $1 million for first-time buyers, with reduced GST on homes priced between $1 million and $1.5 million.
• Reforming the Disability Tax Credit (DTC) application process.
• Introducing an apprenticeship grant of up to $8,000, which converts to a loan if not completed.
• Launching a refundable tax credit for personal support workers, worth up to $1,100 annually.

Employment-related measures:

• Expanding the labour mobility tax deduction by lowering the travel threshold from 150 km to 120 km and increasing the annual deduction limit.
• Enhancing EI benefits to support workers affected by U.S. tariffs and modernize the system for today’s workforce.

Estate and Capital Gains Planning

• Capital gains inclusion rate remains at 50%, with the proposed increase officially cancelled.
• RRIF minimum withdrawals reduced by 25% for one year.
• GIS increased by 5%.

What’s Next?

While these proposals are promising, many lack detail and will require support from opposition parties to pass. Businesses and individuals should stay informed as these measures evolve and prepare for potential changes in the upcoming federal budget.