The federal government continued to introduce changes to Canada's tax regime throughout 2024 that have dramatically altered the tax landscape compared to only a few years ago. A suite of proposals last year promised further change, however, Parliament's prorogation and the looming federal election have thrown many initiatives into uncertain territory. The increased capital gains tax rate, expanded clean economy tax credits, new CRA audit powers, and many others face significant hurdles to enactment.
To help you navigate this uncertainty and effectively plan for 2025, our Tax Perspectives: Review of 2024 and 2025 Outlook provides insights into legislative developments and changes in tax law affecting income tax, commodity tax, and tax disputes and litigation so you can prepare for both the expected and unexpected in Canadian tax this year.
Authored by members of our National Tax Group, this year's commentary covers a wide range of topics to assist businesses from across Canada and abroad in a variety of sectors:
- Income Tax Legislative Developments and
Outlook
- Capital Gains Inclusion Rate Increase and Lifetime Capital Gains Deduction Increase
- Pillar 2 – GMTA and OECD GloBE Guidance Updates
- Clean Economy Tax Credits
- Trust Reporting Rules and Proposed August Amendments re: Bare Trusts
- Alternative Minimum Tax
- Employee Ownership Trusts
- Non-Resident Service Provider Withholding
- Purpose Built Rental Housing Amendments for CCA and EIFEL
- Other Fall Economic Statement Proposals
- Commodity Tax Developments and Outlook
- Digital Services Tax Act Enters into Force
- 2024 GST/HST Relief Tax Holiday
- Tax Disputes and Litigation Developments and
Outlook
- Proposed New CRA Audit Powers
- Income Tax Cases
- GST/HST Cases
Read an excerpt
The prorogation of Parliament creates significant uncertainty regarding whether the Budget 2024 proposal to increase the capital gains inclusion rate from 1/2 to 2/3 for capital gains realized on or after June 25, 2024 (and related proposals) will ever be tabled again and passed into law. The proposed introduction of the clean electricity investment tax credit and electric vehicle supply chain investment tax credit are also in significant jeopardy of never being passed into law. Further, it is questionable whether proposals to expand the property eligible for the clean technology investment tax credit, clean technology manufacturing investment tax credit and the clean hydrogen investment tax credit will be advanced. At this time it is unclear whether such proposals will go ahead in the next session of Parliament or ever become law. This uncertainty is further compounded by the fact that 2025 is a federal election year in Canada and the possibility that a different party from that which was governing at the time these proposals were introduced may form the next government. We have included discussion of these proposals below.
This article provides an overview of the important Canadian legislative and judicial tax developments of 2024, and looks ahead to potential significant Canadian tax changes in 2025. This article does not attempt to be comprehensive, but highlights those developments we consider to be most impactful to a broad audience of our clients. This article describes proposed tax changes that may be affected by prorogation of Parliament and a potential change in government (including those noted above). As mentioned above, there is currently significant uncertainty as to whether such proposed tax measures will ever become law and Canadian taxpayers will be tasked with navigating that uncertainty in 2025. It will therefore be important to watch the development of these proposed measures carefully as the year progresses and the situation in Parliament becomes clearer.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
