The Budget 2025 Implementation Act, No. 1, also known as Bill C-15, was tabled in the House of Commons on November 18, 2025. It’s an omnibus bill designed to formally enact key measures introduced in the 2025 federal budget (Budget 2025), Fall Economic Statement 2024 (FES 2024), and the 2024 federal budget (Budget 2024). While the legislation consolidates and advances these fiscal and policy initiatives, none of its provisions are law until Bill C‑15 completes parliamentary passage.
What are the key measures in this bill?
If passed, Bill C-15 will enact the following:
Increase to the lifetime capital gains exemption
The lifetime capital gains exemption (LCGE) limit will increase to $1.25 million (from approximately $1.017 million) on the sale of qualified small business corporation shares and qualified farm and fishing property for dispositions occurring on or after June 25, 2024. The indexation of the LCGE will resume in 2026.
Immediate expensing and accelerated capital cost allowance measures
Bill C-15 includes measures to:
- Introduce a temporary immediate expensing for eligible manufacturing and processing (M&P) buildings—including additions or alterations to existing buildings—acquired on or after November 4, 2025, and used in a manufacturing process before 2030. The deduction will be subject to a gradual phase-out from 2030 to 2033.
- Provide immediate expensing for qualifying purchases of property in the following asset classes, if acquired on or after April 16, 2024, and available for use before January 1, 2027:
o Class 44 – patents or rights to use patented information
o Class 46 – data network infrastructure equipment and related systems software
o Class 50 – general-purpose electronic data-processing equipment and systems software
- Temporarily reinstate the accelerated investment incentive (AII) and immediate expensing for certain qualifying assets. The reinstated AII provides an enhanced first-year capital cost allowance (CCA) deduction for certain types of eligible property acquired after 2024 and available for use before 2030. The measure would be phased out starting in 2030 and fully eliminated after 2033. Under the current rules, the AII is progressively phased out between 2024 and 2027.
- Provide an accelerated CCA of 10% (up from 4%) for eligible new purpose-built residential rental buildings—including additions and certain conversions—if construction or renovations begin after April 15, 2024, and before 2031, and the property is available for use before 2036.
Used property may qualify for these incentives, provided it was not part of a tax-free rollover and not owned previously by the taxpayer or a non-arm’s length person.
Scientific Research and Experimental Development program enhancements
The 35% refundable Scientific Research and Experimental Development (SR&ED) tax credit will be enhanced to:
- Allow eligible Canadian public corporations (ECPCs) to qualify, subject to a phase-out based on certain revenue thresholds for ECPCs and their consolidated groups. Currently the 35% refundable credit is only available to eligible Canadian-controlled private corporations (CCPCs).
- Increase the annual expenditure limit —which must be shared amongst associated CCPCs and consolidated groups for ECPCs— from $3 million to $6 million (up from the $4.5 million originally proposed in FES 2024).
- Raise the taxable capital thresholds for phasing out eligibility for the 35% refundable tax credit for CCPCs and their associated groups.
- Permit CCPCs and their associated groups to elect to have their expenditure limit phase-out base on certain revenue thresholds instead of their taxable capital (similar to ECPCs).
These measures apply to tax years that begin on or after December 16, 2024.
Bill C-15 also reinstates the eligibility of certain capital expenditures and lease costs for SR&ED incentives, applicable to property acquired or lease expenditures incurred on or after December 16, 2024. Under the current rules, capital expenditures made after 2013 are not eligible for SR&ED.
See our article for more details on these changes and how they may impact your business.
Transfer pricing reform
This bill includes significant changes to modernize Canada’s transfer pricing rules, including alignment with recent Organization for Economic Co-operation and Development transfer pricing guidance (OECD guidance). These changes include, but are not limited to:
- Requiring a more detailed analysis of cross-border transactions between Canadian taxpayers and non-arm’s length non-residents, including delineating transactions with reference to their “economically relevant characteristics”.
- Interpreting the conditions of a transaction to include all relevant commercial and financial information rather than just price and contractual terms.
- Incorporating changes to the formulation of the arm’s length test to broaden the applicability of transfer pricing adjustments and reduce barriers to recharacterization of the transaction. This includes referencing “actual conditions” of the transaction and redefining “arm’s length conditions” to incorporate the possibility that no transaction, or a different transaction would have been concluded had the participants been dealing at arm’s length in comparable circumstances.
- Requiring the new transfer pricing adjustment provisions to be applied in a way to “best achieve consistency” with the OECD guidance.
- Reducing the deadline to provide transfer pricing documentation requested by the CRA to 30 days (from 3 months).
- Raising the de-minimis threshold for the application of transfer pricing penalties to the lesser of 10% of the taxpayer’s gross revenues or $10M (up from the lesser of 10% of gross revenues or $5M).
- Clarifying transfer pricing documentation requirements and introducing simplification measures when certain conditions are met.
These changes would apply to taxation years and fiscal periods that begin after November 4, 2025. If you require assistance, contact your advisor or reach out to our Transfer Pricing team.
Non-taxability of the Canada Carbon Rebate for Small Businesses
The Canada Carbon Rebate for Small Businesses will be tax-free, retroactive to payments received June 20, 2024, and onwards (currently this incentive is taxable in the taxation year received).
This rebate was cancelled effective April 1, 2025, under previously introduced regulations.
Amendments relating to trusts
Several changes impacting trusts are included to:
- Amend the new trust reporting rules, including changes to reporting requirements for bare trusts that apply to taxation years ending on or after December 31, 2026.
- Permit the carry back of a graduated rate estate’s capital losses from its first three tax years (up from one) to offset capital gain in the deceased’s final T1 return, if a valid election is filed.
- Amend the employee ownership trusts rules, including changes relating to the $10 million capital gains exemption available for certain qualifying business transfers.
Repeal of the Underused Housing Tax
The Underused Housing Tax (UHT) rules will no longer apply after the 2024 calendar year under Bill C-15. However, UHT returns and remittances, as well as applicable interest and penalties, will still be enforced for the 2022 to 2024 calendar years.
Elimination of the Digital Services Tax
Bill C-15 rescinds the digital service tax. Under existing rules, Canada’s DST is an annual 3% tax on Canadian-source digital services revenue earned by certain large domestic and foreign businesses.
Limited deduction of investment counsel fees for Alternative Minimum Tax
Bill C-15 includes amendments to limit the deduction of investment counsel and investment management fees to 50% (from 100%) for Alternative Minimum Tax (AMT) purposes. This change will apply retroactively to tax years beginning after 2023.
Other business measures
Other notable business measures in Bill C-15 include changes to:
- Deliver the Clean Electricity investment tax credit, effective April 16, 2024.
- Enhance the existing clean economy investment tax credits, including the Clean Technology investment tax credit, the Clean Technology Manufacturing investment tax credits, and the Carbon Capture, Utilization and Storage investment tax credit.
- Amendments to eliminate tax-deferral opportunities for CCPCs and substantive CCPCs earning investment income through controlled foreign affiliates. The amendments change the relevant tax factor applicable to Canadian-controlled private corporations (CCPCs) and substantive CCPCs to 1.9 from 4, retroactive to tax years that begin on or after April 7, 2022. This will reduce the deduction against foreign accrual property income (FAPI) that CCPCs and substantive CCPCs are entitled to in respect of foreign taxes paid by controlled foreign affiliates. This will also reduce the deduction in respect of foreign taxes applicable to dividends received out of taxable surplus. The result is that the foreign tax rate must be 52.63% in order to fully offset FAPI rather than the current 25%. The amendments also incorporate rules for FAPI repatriated to and distributed by CCPCs and substantive CCPCs to individual shareholders, through adjustments to the calculation of the corporation’s general rate income pool and capital dividend account. However, two elective carve-outs from these changes may apply to FAPI classified as “foreign accrual business income” (FABI) and “FABI surplus”, which generally encompasses FAPI that would not constitute aggregate investment income if earned directly by a CCPC or substantive CCPC.
- Broaden the exception that disallows a tax deferred rollover for certain share exchanges and foreign mergers involving foreign affiliates.
- Extend the deferral of tax and withholding obligations on patronage dividends received in the form of shares from agricultural cooperatives to shares paid before the end of 2030 (up from the end of 2025).
Other personal measures
Notable personal tax measures include changes to:
- Expand the capital gains rollover for qualifying dispositions of eligible small business corporation shares, effective for dispositions occurred on or after January 1, 2025 (see FES 2024 for details).
- Introduce the temporary Personal Support Workers (PSW) tax credit for 2026 to 2030.
- Exclude the Canada Disability Benefit from income starting in 2025.
- Expand the list of eligible expenses for the Disability Supports Deduction for 2024 and onwards.
- Expand the Critical Mineral Exploration Tax Credit to include 12 additional minerals for expenditures renounced under eligible flow-through share agreements entered into after November 4, 2025, and on or before April 1, 2027.
- Extend the Mineral Exploration Tax Credit to investments in eligible mining flow-through shares to March 31, 2027 (from March 31, 2025).
- Prevent both the Home Accessibility Tax Credit and Medical Expense Tax Credit being claimed for the same expenses, starting in 2026.
- Introduce a temporary non-refundable tax credit top-up where an individual’s tax credits exceed the first federal income tax bracket threshold, applicable for 2025 to 2030. This top-up credit is intended to ensure individuals are not subject to higher taxes resulting from the proposed lowest marginal tax rate reduction in Bill C-4. If enacted, Bill C-4 would reduce the lowest marginal tax rate to 14.5% (from 15%) in 2024 and to 14% in 2026 and subsequent years.
Sales tax measures
This bill includes several sales tax measures, including changes to:
- Clarify that osteopathic services provided by anyone other than an osteopathic physician are considered a taxable supply for GST/HST purposes.
- Expand the eligibility for the temporary enhanced (100%) GST rental rebate on the construction of qualifying new purpose-built rental housing to include the construction of certain student housing built by universities, public colleges and school authorities and to qualifying cooperative housing corporations.
- Restrict input tax credits on redeemed coupons to only those payments made exclusively in respect of commercial activities, effective August 16, 2025, and only for input tax credits not already claimed in a return filed before that date.
- Eliminate the luxury tax on specified aircrafts and vessels, effective on November 5, 2025.
- Establish a framework to allow Indigenous governments to opt-in to impose their own fuel, alcohol, cannabis, tobacco, and vaping (FACT) sales taxes.
Tax administration changes
Tax administration changes include amendments to:
- Allow the CRA to issue waivers from the 15% Regulation 105 withholding tax on payments to a non-resident for services performed in Canada for multiple transactions over a specified time period, provided the non-resident meets certain conditions (currently such waivers must be obtained in advance for each transaction).
- Allow the CRA to share information with the Department of Employment and Social Development to improve enforcement against worker misclassification.
These measures are effective once this bill receives Royal Assent.
Takeaway
Bill C-15 includes a variety of tax measures which may impact you, your trust or your business. If you need help navigating these proposed changes or have any questions, our advisors are here to help you. Contact your local advisor or reach out to us here.
Disclaimer
The information contained herein is general in nature and is based on proposals that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice or an opinion provided by Doane Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, specific circumstances or needs and may require consideration of other factors not described herein.
