Photo by Chris DeSort on Unsplash
If you came looking for fireworks, they’re not here. Ottawa’s new budget reads more like a housekeeping session than a show – no rate hikes, no capital-gains plot twist, and a general sense that someone finally swept the floor instead of rearranging the furniture.
We’re not here to put you to sleep or to compete for “Longest Budget Recap.” Think of this as your cheat sheet – enough to impress your friends or at least survive family dinner with a few crisps, defensible takes. For the full chapter-and-verse, the official documents and long-form write-ups are there. If you want the punchlines, you’re in the right place.
Let’s begin……
Immediate Expensing for Manufacturing and Processing Buildings: Tax Nerds’ Delight
Have you been dreaming about writing off the whole cost of a new manufacturing building immediately? Your dreams are (temporarily) coming true. If you put a manufacturing/processing (‘M&P’) building into use and at least 90% of its floor space is M&P, you can deduct 100% in the first year it’s used – so long as the building (or eligible additions/alterations) is acquired on or after Nov 4, 2025 (Budget Day) and first used before 2030.
Miss that window and the write-off steps down to 75% for first use in 2030–2031, 55% for 2032–2033, and no enhanced rate after 2033.
In plain English, if you were waiting for the right time to expand, this is your nudge.
SR&ED Tax Credit: Even More Room to Experiment
The enhanced refundable credit limit is going up again! For CCPCs and some public companies, the maximum amount of qualified SR&ED expenditures eligible for the refundable 35% rate is now $6 million per year (up from $3 million). This applies to taxation years beginning after December 16, 2024.
There is also relief on the gradual phase out on account of prior year taxable capital with the lower and upper limits enhanced to $15 million and $75 million, respectively (up from $10 million and $50 million).
The icing on the cake was restoring the eligibility of SR&ED capital expenditures for both – the deduction against income and investment tax credit components of the SR&ED program.
Dividends and Tiered Corporate Structures: End of a Long Deferral Game
Old trick: set up a string of corporations with staggered year-ends, pay out dividends at just the right moment, and defer the related taxes for a whole extra year (or more).
Bad news: Budget 2025 has shut this down. Refunds are now suspended until the dividend finds its way out of the affiliated chain or hits an individual.
The government is saying, “You can have holding companies and tiered structures, but not for pure tax deferral games.” Most legitimate family business structures survive this change. But if your year-end choices are driven entirely by tax calendar optimization, those benefits are gone. And if you’re realizing this affects you, you need to act before your next fiscal year-end to minimize the impact.
This measure would apply to taxation years that begin on or after November 4, 2025.
Underused Housing Tax: Finally, Some Good News
Rejoice! The Underused Housing Tax (a.k.a the world’s least-loved annual tax return for anyone with even a whiff of non-resident ownership or trust involvement), is GONE as of 2025. No need to file, no need to fret (though the 2022-2024 years still apply, sorry).
Bare Trusts: The Trust That Barely Gets a Break
It doesn’t look like the government is ready to address the havoc created by the strict reporting requirements for bare trusts introduced in 2022. After hearing the collective groan from taxpayers and accountants alike, they’ve decided to defer the application of the rules to bare trusts with taxation years ending after December 31, 2026.
Honestly? We’re hoping these rules get scrapped entirely or significantly simplified because the added red tape often outweighs any real benefit. Let’s keep it simpler, not snoopier.
Lightning Round
If you are still reading through and not yet bored, here is a snapshot of some additional minor changes:
- The Canada Carbon Rebate is being terminated in respect of tax returns filed after October 30, 2026, along with the fuel charge regime. So say your farewells and spend responsibly – maybe on a new bike.
- You can breathe easy. Despite much speculation, Budget 2025 left the capital gains inclusion rate untouched. That means you are still taxed on just half your capital gain, not a penny more. The previously proposed changes were unnecessary, forcing taxpayers to crystallize capital gains – for some, much against their wishes.
- The Alternative Minimum Tax overhaul continues as planned, minus a few short-lived carve-outs from previous proposals.
- And finally, good news for the highflyers (literally). The luxury tax on new aircraft, boats, and yachts has been repealed for purchases or improvements after Budget Day. So if you’ve been holding off on buying that private jet or superyacht until the holiday sales kick in, now’s your chance. Santa might still judge you, but the CRA (for once) won’t take a cut – just remember to invite us to the afterparty.
So no, this wasn’t a budget that changed the world. But it was a budget that quietly rewarded good planning –the kind of planning that happens in spreadsheets, not headlines.
A stronger SR&ED regime, real M&P expenses, cleaner trust rules, and a goodbye to UHT. Less noise. More clarity.
And honestly, that’s a good trade.
— Your trusted advisors at Farnham & Company