On November 4, 2025, the Honourable François-Philippe Champagne, Minister of Finance and National Revenue, tabled the 2025 Federal Budget under the theme “Building a Strong Canada to Meet Today’s Challenges.”
This budget outlines an ambitious investment strategy aimed at stimulating economic growth while maintaining a strong commitment to responsible fiscal management.
Given that our priority is tax planning, we take a deep dive into the impact of these tax measures:
Automatic federal benefits for low-income Canadians
The Canada Revenue Agency (CRA) will gain the authority to automatically file tax returns on behalf of certain low-income individuals who meet specific criteria, including:
Income below the basic personal amount (plus the age and/or disability amount, where applicable);
All income reported on information tax slips filed with the CRA;
A history of non-filing for at least one of the preceding three years; and
No return filed within 90 days of the deadline for the relevant year.
Individuals will be allowed to opt out. This measure applies starting with 2025 taxation years, meaning automatic filings could begin in 2026.
Personal Support Workers Tax Credit
The government is introducing a temporary refundable tax credit for eligible personal support workers. The Personal Support Workers Tax Credit will provide 5% of eligible earnings, up to a maximum of $1,100 annually, for those employed by qualifying health care institutions.
To qualify, workers must provide one-on-one care and essential support under the direction of a regulated health professional or community health organization. Eligible earnings must be certified by the employer.
This measure applies from the 2026 through 2030 taxation years.
Canada Carbon Rebate wind-down
With the elimination of the federal fuel charge effective April 1, 2025, the government issued a final quarterly Canada Carbon Rebate (CCR) payment beginning that month.
To close out the program, no CCR payments will be issued for tax returns or adjustment requests submitted after October 30, 2026.
Extending Employment insurance parental benefits during bereavement
Claimants receiving Employment Insurance (EI) parental benefits will be able to access up to eight additional weeks of benefits in the event of a child’s death, providing extended support for grieving parents.
Early Retirement options for frontline public servants
Eligibility for early retirement under the Public Service Superannuation Act will be extended to additional frontline employee groups, including firefighters, border services officers and parliamentary protection officers.
These employees may retire with an unreduced pension after 25 years of actual service, or at age 50 with at least 25 years of combined actual and deemed operational service (including a minimum of 10 years actual service).
Enhancing access to the Canada Disability Benefit
The government is providing a one-time $150 supplemental payment for each Disability Tax Credit certification or re-certification tied to a Canada Disability Benefit entitlement.
These payments will be retroactive to the program’s launch. Legislation will also exclude the benefit from taxable income, with the first supplemental payments expected before the end of 2026–27.
Corporate Tax
Tax Deferral Through Tiered Corporate Structures
Budget 2025 proposes to limit the deferral of tax on investment income using tiered corporate structures with mismatched year- ends. The proposed limitation would suspend the dividend refund that could be claimed by a payer corporation on the payment of a taxable dividend to an affiliated recipient corporation, where the recipient corporation’s balance-due day for the taxation year in which the dividend is received ends after the payer corporation’s balance-due day for the taxation year in which the dividend was paid.
