{"id":118142,"date":"2025-11-06T06:57:12","date_gmt":"2025-11-06T06:57:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/il\/118142\/"},"modified":"2025-11-06T06:57:12","modified_gmt":"2025-11-06T06:57:12","slug":"budget-2025-made-some-changes-to-tax-policy-what-does-it-mean-for-you-national","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/il\/118142\/","title":{"rendered":"Budget 2025 made some changes to tax policy. What does it mean for you? – National"},"content":{"rendered":"

Prime Minister Mark Carney tabled his government\u2019s first budget<\/a> in the House of Commons on Tuesday, and included in the plan are several changes to taxes<\/a> for Canadians and businesses.<\/p>\n

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Among the proposals are automatic tax filing for low-income Canadians, eliminating \u201cdouble dipping\u201d among some who claim two types of tax credits for the same renovation projects, and a lowering of the effective corporate tax rate for eligible businesses.<\/p>\n

Here\u2019s what we know about the plans.<\/p>\n

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\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t4:32
\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tHighlights from the 2025 federal budget\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/p>\n

\t\t\t\tAutomatic tax filing: are you eligible?\n\t\t\t\t\t\t<\/p>\n

Budget 2025 also proposed introduce automatic tax filing for low-income Canadians.<\/a><\/p>\n

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The measure will apply to Canadians whose income is below the federal basic personal amount or provincial equivalent and who the government says are missing out on rebates and support programs that are calculated and delivered using tax filing records.<\/p>\n

The individuals will be sent their tax information by the Canada Revenue Agency (CRA), after which they will have 90 days to file their tax returns.<\/p>\n

If they do not do so, the CRA can file the tax returns on their behalf.<\/p>\n

In order to spur investment and competition with the U.S., the budget proposes a \u201csuper-reduction\u201d of more than two percentage points to Canada\u2019s marginal effective tax rate for corporations.<\/p>\n

The cut, which will bring that tax rate for eligible corporations down to 13.2 per cent overall, would put Canada further below the U.S. rate and the OECD average.<\/p>\n

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The rate will also dip below the U.S. across all major economic sectors following the cut, according to the budget.<\/p>\n

\t\t\t\tWhat\u2019s the top-up tax credit?\n\t\t\t\t\t\t<\/p>\n

On Tuesday, the budget introduced a \u201ctemporary, non-refundable Top-Up Tax Credit.\u201d<\/p>\n

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This would apply to people whose non-refundable credits exceed the first tax bracket and who could owe more tax due to the reduction of the first personal tax rate and related credit rate earlier this year.<\/p>\n

Back in May, the Carney government lowered the lowest marginal personal income tax rate from 15 per cent to 14 per cent, touting it as a middle class tax cut.<\/p>\n

\u201cWhen the government lowered the first tax bracket, that also reduced the value of various non-refundable credits,\u201d said Jamie Golombek, managing director of tax and estate planning with CIBC Private Wealth.<\/p>\n

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The government estimated that it would end up saving $27 billion for Canadians, but for some Canadians, it meant they lost out on some tax credits.<\/p>\n

\u201cThe measure would benefit a small number of individuals who claim very large non-refundable tax credits that exceed the top of the first bracket threshold ($57,375 in 2025),\u201d the budget document said.<\/p>\n

\t\t\t\tPersonal support worker tax credit\n\t\t\t\t\t\t<\/p>\n

The budget also introduced a federal tax credit for personal support workers.<\/p>\n

Similar credits are already available for personal support workers in British Columbia, Newfoundland and Labrador and the Northwest Territories.<\/p>\n

Under the measures announced in the budget, eligible personal support workers employed in the remaining provinces and territories could claim a refundable tax credit equal to five per cent of their eligible earnings, providing support of up to $1,100 per year.<\/p>\n

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John Oakey, vice-president of Taxation with Chartered Professional Accountants of Canada, said it remains to be seen how eligibility will be defined.<\/p>\n

\u201cWhen we talk about eligibility, and we\u2019re talking about personal care workers, it\u2019s difficult to define,\u201d Oakey said.<\/p>\n

\u201cWe\u2019re going to have to see how well that\u2019s defined and are there going to be people that consider themselves personal care workers that don\u2019t seem to fit within the definitions that are provided.\u201d<\/p>\n

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\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tCarney calls floor-crossing ex-Conservative MP \u2018exceptionally valuable\u2019\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/p>\n

\t\t\t\tNo more \u2018double-dipping\u2019?\n\t\t\t\t\t\t<\/p>\n

One change in the budget will mean seniors or some Canadians with disabilities can no longer claim two separate tax credits for the same expense.<\/p>\n

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The Home Accessibility Tax Credit (HATC) is a non-refundable tax credit that applies at the lowest personal income tax rate on up to $20,000 of eligible home renovation or alteration expenses per calendar year.<\/p>\n

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\n\t\t\t\t\tCarney\u2019s 1st budget aims to balance \u2018generational\u2019 spending with cuts\n\t\t\t<\/p>\n

\t\t\t<\/a><\/p>\n

The Medical Expense Tax Credit is a non-refundable tax credit that applies at the lowest personal income tax rate on the amount of qualifying medical and disability-related expenses in excess of the lesser of $2,834 (for 2025) and 3 per cent of the claimant\u2019s net income, the budget document said.<\/p>\n

There are certain renovations that can qualify for the medical expense tax credit (METC). Currently, if an expense qualifies for both, Canadians have been able to claim tax credit on both.<\/p>\n

Budget 2025 proposes to amend the Income Tax Act \u201csuch that an expense claimed under the Medical Expense Tax Credit cannot also be claimed under the Home Accessibility Tax Credit.\u201d<\/p>\n

This change will apply starting 2026.<\/p>\n

\u201cIf you have the opportunity to spend that money before the end of this year, you get a double credit. Starting Jan. 1, you will not be allowed to double dip. In other words, any expense that you claim as a medical expense will not also be eligible for the home, accessibility tax credits,\u201d Golombek said.<\/p>\n

\t\t\t\tAny changes to capital gains taxes?\n\t\t\t\t\t\t<\/p>\n

For the average person, there are no changes to the capital gains tax system.<\/p>\n

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In March, the Carney government cancelled the capital gains inclusion rate hike, which was proposed by the previous Trudeau government.<\/p>\n

The Canadian Entrepreneurs\u2019 Incentive, a tax credit introduced to offset losses to small businesses, will now be cancelled under Budget 2025.<\/p>\n

\u201cThe estimates for cancelling the proposed capital gains tax increase also include the cancellation of the Canadian Entrepreneurs\u2019 Incentive,\u201d the budget document said.<\/p>\n

\u201cThis was a special incentive for qualifying business owners who sold the business, providing a reduced capital gains tax rate on up to $2 million over a five-year phase-in,\u201d Golombek said.<\/p>\n

\u201cIt\u2019s going to be $400,000 this year, going up to two million dollars in five years. If you sold your business, you\u2019d have a reduced capital gains rate. That has been scrapped altogether,\u201d he said.<\/p>\n

Oakey said the change was \u201clogical.\u201d<\/p>\n

\u201cIt does make logical sense because it was brought in as part of a package to mitigate the increase in the capital gains tax rate. If we\u2019re not going to have an increase in the capital gains tax, then it makes sense that we don\u2019t necessarily need to have the Canadian entrepreneur incentive,\u201d he said, adding that the incentive only added complexity to the system.<\/p>\n

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\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tFederal budget aims to balance spending with controversial cuts\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/p>\n

\t\t\t\tCutting luxury, underused housing taxes\n\t\t\t\t\t\t<\/p>\n

At least two major taxes got the axe in Tuesday\u2019s budget.<\/p>\n

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The government is proposing to eliminate the \u201cinefficient\u201d Underused Housing Tax and the luxury tax on private aircraft and vessels, which the budget says \u201cwill result in administrative savings\u201d for the Canada Revenue Agency.<\/p>\n

The Underused Housing Tax, enacted in 2022, adds an additional one per cent federal tax on the ownership of vacant or underused housing in an effort to crack down on foreign ownership by non-residents.<\/p>\n

The luxury tax, which still applies to luxury vehicle purchases over $100,000, was updated in 2023 to apply to certain vessels like yachts and sailboats, as well as private jets, helicopters and seaplanes.<\/p>\n

The budget says that \u201cto provide relief to the aviation and boating industries and increase the overall efficiency of the luxury tax framework, Budget 2025 announces the government\u2019s intention to end the luxury tax on aircraft and vessels as of the day after Budget Day.\u201d<\/p>\n

\u2013with files from Global\u2019s Sean Boynton<\/p>\n

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