On November 4, 2025, the Federal Budget 2025 was presented. The following summarizes key highlights of the Budget.
Deferral of Bare Trust Reporting
- Deferral of the application date for reporting by bare trusts, so that the new filing requirements and rules would apply to taxation years ending on or after December 31, 2026.
Elimination of the UHT (Underused Housing Tax)
- The UHT will be eliminated starting January 1, 2025; no UHT will be payable and no UHT returns will need to be filed for the 2025 calendar year and subsequent years.
- All UHT obligations for 2022–2024 remain in effect.
Enhanced SR&ED (Scientific Research & Experimental Development) Credits
- The enhanced 35% tax credit now applies to the first $6 million of eligible expenditures (previously $3 million).
- Increase to the prior-year taxable capital phase-out thresholds.
- Applies to taxation years beginning on or after December 16, 2024.
- Capital expenditures used in SR&ED may also qualify for a 100% deduction.
100% Expensing for Manufacturing & Processing Buildings
- Buildings used at least 90% for manufacturing or processing can now be fully expensed (100%) for tax purposes.
- At least 90% of the building’s floor space must be used for manufacturing or processing goods for sale or lease.
- Applies to buildings acquired on or after November 4, 2025, and placed in use before 2030.
New Anti-Avoidance Rule for Tiered Corporate Structures
- Stop CCPCs from deferring refundable dividend tax using tiered corporations with different year-ends.
- Dividend refunds will be suspended until the top company pays a dividend out to individual shareholders or non-connected corporations.
- Effective for taxation years beginning on or after November 4, 2025.
Please contact SBLR for any questions with respect to the above.