The budget expects a deficit of $78.3 billion for 2025-26. This year’s budget includes several notable tax enhancements, including measures to allow immediate expensing for manufacturing and processing buildings, increase the expenditure limit for the Scientific Research and Experimental Development (SR&ED) program, and expand several clean economy input tax credits. In addition, the budget includes significant amendments to modernize Canada’s transfer pricing rules. Note that the budget does not change the federal personal or corporate tax rates.
This year’s budget also announces specific measures intended to simplify and tighten the tax system, including to introduce changes to streamline qualified registered savings plans and expand the anti-avoidance measures relating to the 21-year trust rule. The budget also eliminates certain taxes, including measures to remove the Underused Housing Tax (UHT) as of the 2025 calendar year and to remove the luxury tax on subject aircraft and subject vessels.
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