Canada’s 2025 Budget: What It Means for Your Business

On 4 November 2025, Finance Minister François‑Philippe Champagne presented a budget that keeps corporate and personal tax rates steady but introduces new incentives and anti‑avoidance rules aimed at boosting investment and productivity. Here’s a simple rundown of what matters most for Canadian entrepreneurs.

Highlights for Businesses

• No change in tax rates. Corporate tax rates stay at 15 % for general income and 9 % for small businesses.

• Super‑charged deductions. If you buy or build a factory or processing plant after budget day and use it mainly for manufacturing, you can write off the full cost right away. That full deduction applies until 2029, drops to 75 % for 2030–31, and 55 % for 2032–33. Equipment, patents, networks and other productivity tools also qualify for immediate expensing thanks to previously announced “super‑deduction” rules.

• Bigger R&D credits. The annual spending cap for the Scientific Research and Experimental Development (SR&ED) program jumps to $6 million, and more companies—including public ones—can qualify.

• Clean tech boost. Credits for carbon capture and clean‑technology projects are extended, and new minerals like indium and gallium qualify for manufacturing credits.

• Clampdown on dividend deferral. Companies that used complex corporate chains to delay paying tax on investment income will lose that advantage.

• Tighter transfer‑pricing rules. Firms dealing with related foreign entities will face a new framework and must supply documentation within 30 days instead of three months.

• Luxury and housing taxes gone. The luxury tax on aircraft and vessels ends for purchases after 4 Nov 2025, and the underused housing tax will end from 2025 onwards.

Highlights for Individuals

• Lower tax on the first dollars you earn. The lowest personal tax bracket rate will drop from 15 % to 14.5 % in 2025 and 14 % in 2026.

• New top‑up credit. A temporary credit will keep many other non‑refundable tax credits at 15 % for amounts above $57,375.

• Support for caregivers. A refundable credit worth 5 % of earnings (up to $1,100) is available to personal support workers from 2026–2030.

• Automatic filing. The CRA will begin auto‑filling tax returns for about a million low‑income Canadians in 2025, ensuring they don’t miss out on benefits.

Quick Tips for Entrepreneurs

• Move quickly on property and equipment. Build or buy facilities before 2030 to maximize the 100 % write‑off, and consider upgrading equipment, software and networks while super‑deductions apply.

• Invest in innovation and green projects. The richer SR&ED credits and extended clean‑tech incentives make R&D and green investments more attractive.

• Check your corporate structure. If you rely on dividend flows through multiple companies, revisit your structure to avoid the new anti‑deferral rule.

• Get your transfer‑pricing house in order. With shorter response times and higher penalties, make sure cross‑border transactions are well documented.

• Think about personal taxes too. Lower rates and new credits might influence whether you pay yourself salary or dividends; consult your advisor.

Conclusion

The 2025 budget doesn’t overhaul the tax landscape, but it offers worthwhile incentives and modernises compliance rules. By aligning investment plans and tax strategies with these measures, SMEs can reduce their tax burden and stay ahead of regulatory changes. As always, personalized advice from qualified tax professionals is essential to navigate these changes and align them with your business and personal goals.