On November 4, 2025, the Minister of Finance presented the 2025 federal budget. Here is an overview of the tax measures that could have an impact on individuals and businesses.
Measures for private customers
The budget clarifies certain previously announced measures, including :
- Cancellation of capital gains inclusion rate increase: Budget 2025 cancels the increase in the capital gains inclusion rate that was proposed in 2024. The rate remains at 50% for all capital gains.
- Canadian Entrepreneur Incentive Cancelled: Budget 2025 cancels the incentive that would have allowed certain entrepreneurs wishing to sell their businesses to reduce the tax rate on capital gains.
- Increasing the capital gains deduction (CGD): Budget 2025 confirms the federal government’s intention to move forward with increasing the CGD to $1.25 million.
- Automated tax filing: Budget 2025 proposes that the Canada Revenue Agency be able to file tax returns for certain low-income individuals to ensure that they receive the benefits and credits to which they are entitled. This measure would apply as early as 2025.
Measures for businesses
The budget focuses on stimulating investment and innovation, notably through the following measures:
- Immediate expensing (manufacturing or processing buildings) : An enhanced deduction of 100% is available for the acquisition of new manufacturing or processing buildings and additions thereto. Eligible assets must be acquired on or after November 4, 2025, and used for the first time before 2030.
- Immediate expensing (manufacturing and processing equipment, patents, data network infrastructure and computers): The 2025 Budget confirms the measure announced in the Fall 2024 Economic Statement regarding immediate expensing (100% deduction in the first year). This measure concerns manufacturing and processing equipment, patents, data network infrastructure and computers.
- Accelerated investment incentive: Budget 2025 confirms the government’s intention to offer an enhanced first-year deduction for most capital assets. This measure is designed to encourage companies to invest quickly in new equipment and productive assets.
- Accelerated capital cost allowance for new rental housing: Budget 2025 reiterates the government’s intention to proceed with a 10% accelerated capital cost allowance for new rental housing. Buildings must have at least four private units, and at least 90% of the units must be intended for long-term rental.
- Enhanced SR&ED program: The government confirms its intention to raise the expenditure ceiling for the tax credit from $4.5 million to $6 million. In addition, an administrative reform has been announced to accelerate the processing of claims, notably through a prior approval process.
- Limiting tax deferral by corporate tier: Budget 2025 proposes to introduce new rules that will limit the ability to defer a dividend refund when a corporation pays a dividend to a corporation with a staggered year-end.
Conclusion
This summary is provided for information purposes only and does not constitute tax advice. For advice tailored to your situation, please consult a professional. For more detailed explanations of each measure, we invite you to refer to the 2025 federal budget summary written by the Ordre des CPA du Québec.
An article by our Tax team
