As Canada heads toward the 2025 tax year, both individuals and businesses should pay close attention to the federal and provincial tax proposals outlined in Budget 2025. While not yet enacted, these measures have significant financial planning implications — especially for corporations investing in capital assets, families managing personal income, and investors in clean-technology or resource-based projects.
This detailed review summarizes the most important proposals and outlines how taxpayers can prepare before legislation is finalized.
1. Federal Tax Proposals
a) Lower First Federal Personal Tax Bracket
Budget 2025 proposes reducing the first federal tax bracket from 15% → 14.5% in 2025, and further to 14% in 2026.
Impact:
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Lower-income and middle-income individuals receive slightly more net pay.
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Employers should prepare to update payroll tax tables once legislation is passed.
b) Refundable Top-Up Credit
For individuals whose personal non-refundable credits (basic exemption, spouse credit, disability, etc.) don’t fully offset tax payable, a new Refundable Top-Up Credit is proposed.
Impact:
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Helps seniors, low-income workers, and newcomers.
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Tax software and planning tools will need recalibration.
c) Clean Economy Investment Incentives
Several clean-tech and clean-energy credits will expand to include:
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Additional critical minerals
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New eligible equipment classes
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Extended full-rate CCUS credit until 2035
Impact:
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Strong incentives for corporations to move forward with clean-tech capital projects.
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Pension funds and investment vehicles may now qualify for certain credits.
d) Immediate Expensing for Manufacturing/Processing Buildings
Corporations will be able to immediately expense 100% of eligible buildings acquired on/after Nov 4, 2025, if first used before 2030.
Impact:
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Major tax savings for manufacturers.
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Encourages near-term capital investment.
e) SR&ED and Critical Mineral Tax Credit Enhancements
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SR&ED expenditure limit increased
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CMETC expanded to more minerals
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Flow-through share credit window extended until March 31, 2027
Impact:
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Significant opportunities for innovation-focused businesses.
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Investors in mining/exploration may see higher after-tax returns.
2. Provincial Budget Signals
Ontario
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Proposed Ontario Manufacturing Investment Tax Credit (OMITC)
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Potential personal tax and housing-related measures
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Businesses in manufacturing, construction, real estate should watch for rollout
Québec
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Enhancements to film, digital media, and energy-transition credits
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Green-economy incentives expected in upcoming provincial update
Alberta
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Confirmed 8% personal income tax bracket on first $60,000
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Payroll systems should be updated once legislation is enacted
British Columbia
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PST review for digital goods & temporary-use assets
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Possible amendments to digital-economy tax treatment
3. What Taxpayers Should Do Now
For Individuals
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Plan 2025 cash flow assuming lower first tax bracket
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Seniors & newcomers should revisit benefits eligibility
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Keep CRA MyAccount updated to ensure accurate credits
For Businesses
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Review capital spending plans for 2025-2030
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Model tax savings under immediate expensing & clean-tech credits
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Update payroll systems for upcoming rate changes
For Investors
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Evaluate opportunities in clean economy, critical minerals & flow-through shares
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Confirm compliance windows (e.g., renunciation deadlines to 2027)
4. Summary
Budget 2025 is shaping Canada’s tax landscape across all sectors — individuals, families, corporations, investors, and clean-tech developers. While these proposals are not yet law, proactive planning allows taxpayers to secure benefits once enacted.
For personalized guidance, please contact AsraniCPA – Your Trusted Accountant.
416-561-4041 | www.asranicpa.ca
