On 28 April 2025, subject to any potential recounts, the federal Liberal Party was reelected with a minority government. As it stands at the time of writing, the Liberal Party has 169 seats and will thus needs the support of a few members of the opposition parties — likely from the New Democratic Party or the Bloc Québécois — to adopt their commitments, which include a number of proposed tax measures for individuals and corporations (a minimum of 172 seats is required to have a majority of seats in the House of Commons).

Several of the proposed tax measures contained in the election platform will likely be included in the next federal budget.

The tax measures that formed part of the Liberal Party's 2025 election platform, Canada Strong, include those highlighted below.

Business income tax measures

Immediate expensing and accelerated investment incentive (AII). This provision will extend immediate expensing for manufacturing or processing machinery and equipment, clean energy generation, energy conservation equipment and zero-emission vehicles, as well as the AII. This will likely build on or be similar to the proposed measures announced in the 2024 Fall Economic Statement (see EY Global Tax Alert, Canada issues Federal Fall Economic Statement 2024, dated 17 December 2024).

Carbon capture, utilization and storage (CCUS) tax credit. The full value of the credit will be extended to 2035. Currently, the credit is scheduled to be phased out by reducing the credit rate beginning in 2030, before it is fully eliminated after 2040.

Clean economy tax credits. The six clean economy investment tax credits will continue, including the enacted CCUS, clean technology, clean hydrogen and clean technology manufacturing investment tax credits, and the proposed clean electricity and electric vehicle supply chain investment tax credits.

Critical mineral tax incentives. Existing tax incentives will be expanded for critical mineral exploration and extraction, including:

• Critical mineral exploration tax credit — Expanding qualifying minerals to include critical minerals necessary for defense, semiconductors, energy and other clean technologies
• Canadian exploration expenses (CEE) — Expanding CEE to include costs of technical studies, such as engineering, economic and feasibility studies for critical mineral projects
• Clean technology manufacturing investment tax credit — Modifying the credit to include critical mineral mine development expenses for brownfield sites while expanding the list of priority critical minerals

Scientific research and experimental development (SR&ED). The claimable amount under the SR&ED incentive program will be increased to CA$6m for small to medium-sized Canadian companies, along with other reforms. This will likely build on proposed measures announced in the 2024 Fall Economic Statement (see EY Global Tax Alert, Canada issues Federal Fall Economic Statement 2024, dated 17 December 2024).

Patent box. A patent-box regime will move forward.

Artificial intelligence (AI) deployment tax credit. A new 20% tax credit will be provided for qualifying AI adoption projects by small and medium-sized businesses that can demonstrate job increases.

Multi-unit rental building tax incentive. A tax incentive will be reintroduced for home builders of multi-unit rental housing.

Flow-through shares. Flow-through shares will be introduced for Canadian start-ups, to support businesses in AI, quantum computing, biotech and advanced manufacturing.

Tax system review. The corporate tax system will be reviewed with a view to transparency, simplicity, sustainability and competitiveness.

The election platform also contained commitments to the international reform measures proposed by the Organisation for Economic Co-operation and Development and to leverage technology at the Canada Revenue Agency to identify tax evasion, fix loopholes and strengthen enforcement.

Personal income tax measures

Tax rate. The marginal tax rate on the lowest tax bracket will be reduced by one percentage point, as of 1 July 2025.

Tax credit for personal support workers. A new refundable Health Care Workers Hero Tax Credit will be introduced for up to CA$1,100 per year.

Registered retirement income fund (RRIF). The minimum amount that must be withdrawn from an RRIF will be reduced by 25% for one year.

Disability tax credit. The application process for the disability tax credit will be reviewed and reformed, and expanding the eligibility criteria to include additional impairments will be considered.

Labor mobility tax deduction. The tax deduction for workers traveling more than 120 km from their home to a job site will be expanded by significantly increasing the per-year tax deduction limit upon consultation with key industries.

Automatic tax filing. Automatic tax filing will be provided starting with low-income households and seniors, to ensure they access the benefits they are entitled to.

Indirect tax measures

Goods and Services Tax (GST). The GST will be cut for first-time homebuyers on homes up to CA$1m and lowered on homes between CA$1m and CA$1.5m for first-time buyers.

Carbon tax. The Greenhouse Gas Pollution Pricing Act will be amended to legislate the repeal of the consumer carbon tax, as well as to make sure large emitters pay through improvements of the output-based pricing system (while protecting the competitiveness of the Canadian industry) and deliver a plan to reduce emissions and drive investments in clean technologies.

Customs measures

Free-trade deals. New trade deals will be pursued with the MERCOSUR¹ and ASEAN² trading blocs.

Special Import Measures Act (SIMA). The SIMA will be modernized to update Canada's trade remedy tools in situations of circumvention or diversion, including legislating express timelines for safeguard actions.

Carbon border adjustment mechanism. A carbon border adjustment mechanism will be developed to promote fair competition with our trading partners.