2025 Federal Budget: What Taxpayers Need to Know
On November 4, 2025, the Honourable François-Philippe Champagne, Minister of Finance and National Revenue, tabled the 2025 Federal Budget. With a projected deficit of $78.3 billion for 2025–26, the Budget focuses on driving economic growth, supporting workers, and simplifying compliance.
For Atlantic Canadians, the Budget carries meaningful implications, particularly for individuals, families, and industries such as manufacturing, clean energy, and construction.
At a Glance
Budget 2025 introduces new and expanded tax measures for both individuals and businesses. Here’s a summary of key highlights and what they could mean for you.
For Individuals & Families
Automatic Federal Benefits for Lower-Income Non-Filers
Starting with the 2025 tax year, the CRA may prepare a basic tax return on behalf of certain lower-income Canadians who haven’t filed. You’ll receive a draft return and have 90 days to confirm or correct it, potentially helping more people access benefits they’re entitled to.
Qualified Investments for Registered Plans
Rules for RRSPs, RRIFs, TFSAs, RESPs, RDSPs, FHSAs, and DPSPs will be simplified and harmonized. The current “registered investment” regime will be replaced by two new categories of qualified investments, streamlining compliance for investors and advisors alike. These rules take effect on November 4, 2025.
Personal Support Workers (PSW) Tax Credit (2026–2030)
A new 5% refundable credit, up to $1,100 per year, will apply to eligible earnings of qualifying PSWs working for approved health-care employers. This is welcome news for many in Atlantic Canada’s expanding health-care sector. The measure recognizes the vital role of frontline caregivers while helping employers retain staff in a sector facing persistent labour shortages.
Top-Up Tax Credit (2025–2030)
To preserve the value of most non-refundable tax credits, the government is introducing a “top-up” to maintain its effective 15% rate, even as the first federal bracket rate declines. This ensures that key credits – such as the disability, caregiver, and pension amounts – continue to provide consistent relief for Canadians without any additional action required by taxpayers.
Home Accessibility Tax Credit (2026+)
New anti-duplication rules will prevent double-claiming expenses under both the Home Accessibility and Medical Expense Tax Credits – clarifying eligibility for those planning aging-in-place renovations. This update gives homeowners clearer guidance when budgeting for accessibility improvements and reinforces support for Canadians choosing to remain safely in their homes as they age.
Canada Carbon Rebate (CCR)
No new CCR payments will be made for returns or adjustments filed after October 30, 2026, as systems are phased out following fuel-charge changes. Taxpayers should complete any outstanding filings before the deadline, as the government transitions to updated climate and energy rebate programs.
For Corporations & Businesses
Immediate Expensing for Manufacturing & Processing Buildings
Businesses will be able to deduct 100% of the cost of eligible M&P buildings (and qualifying alterations) used at least 90% for manufacturing or processing. The incentive applies to property acquired on or after November 4, 2025, and first used before 2030, an important opportunity for Atlantic manufacturers, seafood processors, and construction firms.
Agricultural Cooperatives
The temporary deferral of tax on patronage dividends paid in shares is extended to eligible shares issued before the end of 2030, providing flexibility for agricultural co-ops. This extension helps co-ops and their members plan cash flow and reinvestment strategies, supporting long-term growth across Canada’s agricultural sector.
SR&ED Enhancements
The enhanced 35% expenditure limit rises to $6 million for tax years beginning on or after December 16, 2024, supporting innovation in marine technology, clean energy, and advanced materials. This increase provides Atlantic Canadian innovators with greater access to funding, encouraging continued investment in research and development and helping firms stay competitive in high-growth sectors.
Critical Minerals & Clean Tech Incentives
The list of eligible critical minerals is expanding for both the Critical Mineral Exploration Tax Credit (CMETC) and the Clean Tech Manufacturing Investment Tax Credit. Newly eligible minerals include: bismuth, cesium, chromium, fluorspar, germanium, indium, manganese, molybdenum, niobium, tantalum, tin, and tungsten for the CMETC, and antimony, indium, gallium, germanium, and scandium for the Clean Tech Manufacturing Investment Tax Credit.
These updates apply to expenditures renounced under eligible flow-through share agreements entered into after November 4, 2025, and on or before March 31, 2027, and to eligible property acquired and available for use on or after November 4, 2025. These changes are particularly relevant to Atlantic Canada’s emerging resource and clean-tech industries.
Carbon Capture, Utilization, and Storage (CCUS) Credit
The full credit rates are extended by five years, available for expenditures from 2022 through 2035. This extension provides businesses in Atlantic Canada with greater certainty for planning and investing in carbon-reducing technologies, supporting both environmental goals and economic growth in the region.
Clean Electricity Investment Tax Credit
Now includes financing through the Canada Growth Fund, ensuring clean-energy projects remain fully eligible even when supported by public investment. This update allows Atlantic clean-energy developers to access crucial funding while preserving the full value of tax incentives for eligible projects, supporting the growth of the region’s renewable energy sector.
Tiered Corporate Structures
The government may temporarily suspend dividend refunds where intercompany dividends are paid between affiliated corporations with mismatched year-ends. This could affect cash flow timing for larger corporate groups beginning after November 4, 2025.
Canadian Exploration Expense (CEE)
The Budget clarifies that Canadian exploration expenses include costs incurred to determine the existence, location, extent, or quality of a mineral resource in Canada – but not expenses related to assessing the economic viability or engineering feasibility of that resource. This clarification helps align definitions across the sector and ensures that flow-through share investors can continue to claim a 100% immediate deduction on eligible exploration expenses incurred on or after November 4, 2025.
International Tax Updates
Canada’s transfer pricing rules are being modernized to better align with the OECD Transfer Pricing Guidelines, adding clarity to how cross-border transactions between related parties are assessed.
Additionally, new rules will ensure investment income from assets backing Canadian insurance risks is properly included in foreign accrual property income (FAPI), beginning for taxation years after November 4, 2025. These updates provide multinational businesses and insurers with clearer guidance, helping them manage cross-border transactions and FAPI reporting more confidently while maintaining compliance with evolving international standards.
Sales, Excise & Compliance Measures
Underused Housing Tax (UHT): Repealed starting in 2025, though filings remain required for 2022–2024. Property owners should ensure all past filings are complete and accurate to avoid penalties, while planning ahead for the repeal in 2025.
Luxury Tax on Aircraft & Vessels: Eliminated for transactions after November 4, 2025, notable for Atlantic shipbuilders and marine industries. Businesses in these sectors should review upcoming purchases and contracts to take full advantage of the repeal and optimize cash flow.
Carousel Fraud Rules (GST/HST): New measures target tax evasion schemes and invite public feedback by January 12, 2026. Firms should assess their supply chains and reporting practices to ensure compliance and consider submitting input on the proposed rules.
Manual Osteopathic Services: Supplies for Manual Osteopathic Services will become taxable under GST/HST for transactions after June 5, 2025. Service providers should update billing systems, communicate changes to clients, and plan for the additional compliance obligations.
Atlantic Canada Implications
The 2025 Budget reinforces Ottawa’s ongoing emphasis on housing, infrastructure, and innovation. For Atlantic provinces, enhanced clean-tech incentives, manufacturing expensing, and infrastructure investments signal opportunity across key sectors, particularly in renewables, construction, marine industries, and professional services.
Businesses should begin planning now to align acquisitions, capital investments, and corporate structures with these proposed timelines. Proactive planning will help Atlantic businesses maximize available incentives, streamline operations, and position themselves for growth as these measures come into effect.
What to Do Now
Individuals: If you’re a potential non-filer, watch for CRA correspondence and respond within 90 days. Review any draft returns carefully to ensure all income and deductions are correctly captured, helping to avoid surprises at tax time.
Health-care employers: Track PSW earnings and prepare to certify eligibility for 2026 claims. Maintaining accurate records now will streamline claims and ensure your staff can access the full benefit of the new tax credit.
SMEs and manufacturers: Time building acquisitions and first-use to capture the 100% deduction (or enhanced CCA in 2030–33). Coordinate with your accounting and operations teams to maximize the tax impact of capital investments and optimize cash flow planning.
Corporate groups: Model cash-flow impacts if dividend refunds may be delayed under the new tiered-structure rules. Consider revising intercompany dividend strategies and year-end planning to minimize any potential disruption to liquidity.
Property owners: Complete UHT filings for 2022–2024; plan for repeal starting in 2025. This is also an ideal time to review property holdings and evaluate the effect of the repeal on long-term real estate strategies.
Need Help Planning Ahead?
Our team can help you navigate Budget 2025’s proposals, whether you’re managing a business, planning your retirement, or exploring investment opportunities. We can work with you to develop tailored strategies that maximize available tax incentives, streamline compliance, and position you for growth under the new rules.
📞 902-468-5500
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Call today to schedule your retirement income consultation.