Canada: Direct and indirect tax measures in 2025 federal budget, including amendments to modernize transfer pricing rules

The Finance Minister delivered 2025 budget on November 4, 2025.

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november 5, 2025

The Finance Minister on November 4, 2025, delivered the 2025 federal budget, which does not change the federal individual (personal) or corporate tax rates, but does include several tax enhancements, including:

  • Immediate expensing for manufacturing and processing buildings
  • Increased expenditure limit for the scientific research and experimental development (SR&ED) program
  • Expansion of several clean economy input tax credits
  • Amendments to modernize Canada’s transfer pricing rules

This year’s budget also announces specific measures intended to simplify and tighten the tax system, including:

  • Changes to streamline qualified registered savings plans and expand the anti-avoidance measures relating to the 21-year trust rule
  • Elimination of certain taxes, including measures removing the underused housing tax (UHT) as of the 2025 calendar year
  • Repeal of luxury tax on subject aircraft and subject vessels

Read a November 2025 report prepared by the KPMG member firm in Canada

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