11/05/2025
Canada’s 2025 Budget: Key Tax Proposals You Need to Know!
The 2025 Canadian federal budget brings significant changes to the tax landscape, with particular focus on housing, GST, and trust regulations. Here’s a breakdown of the major proposals:
1. Underused Housing Tax (UHT) Gets the Ax – The UHT, which targeted non-resident owners of vacant properties, will be eliminated starting from the 2025 calendar year. No more UHT returns or payments after this year!
2. GST Exemption for First-Time Home Buyers – The government is making it easier for Canadians to own their first home by eliminating GST on new homes up to $1 million and reducing GST on homes valued between $1 million and $1.5 million. This will immediately lower the cost of newly built homes.
3. No More Luxury Tax on Aircraft and Vessels – In a big win for high-net-worth individuals, the luxury tax on aircraft and vessels valued above certain thresholds will be removed, effective immediately.
4. Immediate Expensing for Manufacturing Buildings – Manufacturers can now immediately expense eligible buildings used for manufacturing or processing, providing a 100% deduction in the first year.
5. Strengthening Trust Regulations – The 21-year rule for personal trusts has been tightened, expanding the anti-avoidance rules to include indirect trust-to-trust transfers, ensuring that trusts can’t sidestep tax deferral.
6. Canada Carbon Rebate (CCR) Ends – With the federal fuel charge being eliminated, the final CCR payment will be made in April 2025, and no further payments will be processed after October 2026.
7. Personal Income Tax Reduction: A middle-class tax cut will reduce the lowest federal income tax rate from 15% to 14%, starting July 1, 2025.
8. Bare-trust reporting: Deferred to 2026.
