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Canada: 2025 budget tax measures, including new transfer pricing rules and repeal of DST, enacted

Bill C-15 received Royal Assent on March 26, 2026.

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April 1, 2026

Bill C-15, which includes the following tax measures from the 2025 federal budget, received Royal Assent on March 26, 2026:

  • New transfer pricing adjustment rules and documentation requirements effective for tax years beginning after November 4, 2025, and requirement that taxpayers analyze cross-border transactions between non-arm’s-length persons based not only on contractual terms, but also on other economically relevant characteristics
  • Repeal of the Digital Services Tax Act
  • Enhancements to scientific research and experimental development (SR&ED) program
  • Anti-deferral and foreign accrual business income (FABI) rules affecting Canadian-controlled private corporations (CCPCs) and substantive CCPCs that earn investment income indirectly through a controlled foreign affiliate (CFA) as foreign accrual property income (FAPI)
  • Various changes to clean economy investment tax credits
  • Technical amendments to excessive interest and financing expenses limitation (EIFEL) rules
  • Accelerated investment incentive (AII) and immediate expensing for certain qualifying assets
  • Accelerated capital cost allowance (CCA) for purpose-built rental housing
  • Reinstatement of the accelerated deduction for Canadian development expenses and oil and gas property expenses
  • Purpose-built rental housing rebate for qualifying cooperative housing corporations and rebate for new student residences
  • Authority for the tax authority to waive the withholding requirement for payments to certain nonresident service providers (Regulation 105)
  • Elimination of underused housing tax (UHT) for 2025 and subsequent years
  • Elimination of luxury tax on subject aircraft and vessels
  • Provisions relating to taxation of international shipping business of Canadian resident corporations

Read a March 2026 report prepared by the KPMG member firm in Canada

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