Canada unveils draft tax legislation, maintains key economic policies

Published 15/08/2025, 21:56
Canada unveils draft tax legislation, maintains key economic policies

Investing.com -- Canada’s Department of Finance released draft tax legislation on Friday that maintains several economic policies proposed by the previous administration, showing continuity under Prime Minister Mark Carney’s leadership.

The draft legislation confirms commitments made in the 2024 Fall Economic Statement and Budget 2024, despite the political transition following former Prime Minister Justin Trudeau and Finance Minister Chrystia Freeland’s resignations.

Finance Minister François-Philippe Champagne is seeking stakeholder feedback before a September 12 deadline, ahead of Parliament reconvening later this year.

Key proposals include broadening eligibility for capital gains rollover rules to support small business transitions, with a $10 million exemption for sales to worker cooperatives. Technical changes to employee ownership trusts are also included to encourage domestic and employee-led business ownership.

Scientific research and experimental development activities would receive higher expenditure limits and renewed eligibility for refundable credits, including capital investments and certain public corporations.

The draft legislation enhances reporting requirements for nonprofit organizations and introduces new compliance penalties, giving the Canada Revenue Agency more enforcement powers. Canada is also proceeding with the OECD’s Crypto-Asset Reporting Framework implementation and updates to the Common Reporting Standard.

While maintaining most of Trudeau’s fiscal agenda, Carney’s government has abandoned a planned increase to the capital gains inclusion rate and suspended the carbon tax.

The legislation also includes exemptions from the Excessive Interest and Financing Expenses Limitation rules for purpose-built rental housing and regulated Canadian utilities, aiming to support infrastructure investment and address affordability issues.

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