Upcoming Federal Budget 2025 Overview: What Canadian Businesses Can Expect 

Budgets move markets, but this year’s fall release of Mark Carney’s first full “Budget 2025” could also change how Canada measures the future. 

Canada’s federal government will table Budget 2025 on Tuesday, November 4. That date is now official, and it marks the start of a permanent shift to a fall budget cycle. The Department of Finance confirmed both the timing and a new Capital Budgeting Framework that will sit at the center of how the Canadian government plans and explains spending.  

For Canadian businesses, the signals for this upcoming budget point to targeted tax changes, clean economy incentives moving from promise to practice, and a new structure for federal capital funding that could affect deal timing, program design, and cash flow. 

“It’s a budget of austerity and investment at the same time; and that’s possible if you have discipline.” 
– Mark Carney, Prime Minister of Canada 

Below is a grounded preview of what to watch for on corporate tax, indirect tax, and funding so Canadian companies can plan with confidence. Where we reference possible measures, we tie them to public consultations, draft legislation, or official news releases. 

 

Corporate Tax and Incentives 

Draft tax measures are on the runway. On August 15, 2025, Finance Canada released draft legislation for consultation that would advance several previously announced items. Highlights include the following: 

• SR&ED enhancements: raising the enhanced 35 percent credit expenditure limit to $4.5 million, extending the refundable credit to small public corporations, and reinstating the eligibility of capital expenditures 
• Excessive interest and financing expenses limitation (EIFEL) relief tied to purpose‑built rental housing and regulated energy utilities 
• Crypto‑asset reporting under the Organisation for Economic Cooperation and Development (OECD) Crypto-Asset Reporting Framework (CARF) and updates to the Common Reporting Standard 
• New Canada Revenue Agency (CRA) information powers and penalties to support audit and enforcement 
• Business succession incentives, including a $10 million capital gains exemption for qualifying sales to worker co‑ops and technical changes for employee ownership trusts 

These draft proposals are not yet law, but they signal where Budget 2025 could land. 

“I often make an analogy between 2025 and 1945. In 1945, Canada reinvented itself, and I think this is one of those moments.” 
– François-Philippe Champagne, Minister of Finance of Canada 

SR&ED Impacts 

Budget 2024 set aside $600 million over four years, with $150 million ongoing, to modernize SR&ED. Finance then ran a two‑phase consultation in 2024. The 2024 Fall Economic Statement proposed the higher expenditure limit and other program changes, which now appear in the August 2025 draft legislation.  

Companies can expect Budget 2025 to convert parts of this into law and clarify effective dates and transition rules. Companies in technology, life sciences, advanced manufacturing, and food processing should model the proposed $4.5 million limit and capital cost reinstatement against their current claims. 

OECD Pillar Two Impacts 

Operational questions remain. Canada’s Global Minimum Tax Act received Royal Assent on June 20, 2024, making the 15 percent minimum tax framework effective for in‑scope multinationals for years beginning on or after December 31, 2023.  

In June 2025, G7 finance ministers acknowledged work on a “side‑by‑side” approach addressing U.S. concerns about the Income Inclusion Rule (IIR) and Undertaxed Profits Rule (UTPR). Budget 2025 may clarify how Canada will align Pillar Two administration with any evolving G7 consensus, particularly on the UTPR and safe harbours. In‑scope Canadian groups should continue readiness work on data, effective tax rate (ETR) modelling, and filings. 

Clean Economy Investment Tax Credits (ITC) 

Key clean economy ITCs are now in play, with more guidance expected. The Clean Technology ITC is live for eligible property available for use from March 28, 2023, to December 31, 2034.  

Draft legislation and administrative guidance on Clean Electricity, Clean Hydrogen, and Clean Technology Manufacturing ITCs continues to advance, with Finance releasing iterative proposals through 2024 and 2025. Budget 2025 is a natural place to consolidate technical clarifications, including labour requirement details and rules regarding interactions among credits. Manufacturers, energy producers, and supply‑chain participants should refresh project pro formas to reflect any changes to the  ITC mechanics and labour rules. 

Sector Signals to Monitor 

• Manufacturing and EV supply chains: Finance ran consultations on a potential Electric Vehicle Supply Chain ITC in March 2025. If announced, eligibility criteria will matter more than headlines. 
• Real estate and rental housing: The proposed EIFEL carve‑out for purpose‑built rentals could ease debt finance constraints on new builds, subject to final definitions and anti‑avoidance rules.  
• Technology and life sciences: SR&ED modernization plus clean economy ITCs could materially improve project after‑tax returns; watch for patent box discussions to resurface, given prior consultations.  

What This Means for Business Planning 

To prepare ahead of official announcements, businesses can begin to build Budget Day scenarios now by modelling SR&ED claims at both current and draft settings, assessing Pillar Two impacts by jurisdiction, and identifying projects that may qualify for clean economy ITCs. Then, your business can move quickly once details are finalized. 

Indirect Tax, Digital Reporting, and Payroll Tax 

GST/HST Housekeeping and Targeted Changes 

Two areas stand out: 

• Student residences: Finance consulted in January 2025 on removing the GST on student residences, a change that would affect builders, universities, and housing providers if enacted.  
• Coupons and input tax credits: The August 2025 draft legislation would limit ITCs for redeemed coupons (including loyalty program points) to GST/HST in respect of payments made exclusively in the course of commercial activities.  As this legislative change is in response to a recent court decision, it is expected to pass, and financial institutions, retailers, and consumer packaged goods (CPG) manufacturers should review the mechanics and contract language of their promotional programs accordingly.  

Digital Reporting and Enforcement 

The draft legislative package would implement the OECD CARF in Canada and update the Common Reporting Standard. It also proposes enhanced CRA information powers and a new penalty for noncompliance. Platform operators, fintech, and intermediaries should review data capture, onboarding, and cross‑border reporting processes to ensure traceability from day one. 

Payroll Tax 

Budget documents sometimes announce policy directions affecting payroll tax costs, but Canada Pension Plan (CPP) and Employment Insurance (EI) rates and thresholds are largely set through separate processes. Treat Budget 2025 as a place where any labour‑market measures could be signalled, rather than where the rates will be determined. Align your cash forecasts with statutory indexation timelines and flag any workforce incentives tied to clean economy ITC prevailing wage and apprenticeship rules. 

What This Means for Business Planning 

To prepare ahead of official announcements, businesses can validate how proposed GST/HST and crypto‑reporting changes could impact their systems and map who owns data, who will have reporting requirements, and what evidence needs to be retained. Government Funding, New Budget Framework, and Why the Timing Shift Matters 

A new budgeting lens could shape program design. The government released a detailed Capital Budgeting Framework that separates day‑to‑day operating spending from spending that drives public or private capital formation. It will be applied to Budget 2025, with the goal of improving transparency, comparability, and planning. For companies, this could influence the structure of grants and tax credits, the degree of emphasis on conditional funding tied to new assets, and the cadence of infrastructure‑adjacent programs. 

Fall budgets are now the main event. The shift to a fall budget cycle aims to align federal planning with the Main Estimates and give businesses, provinces, and municipalities more lead time before the fiscal year. The Department of Finance says this should support better oversight by Parliament and allow projects to start earlier in the construction season. Expect a spring economic and fiscal update to complement the fall budget. 

PBO Perspective on Capital 

The Parliamentary Budget Officer’s (PBO) recent work shows an improved ability to project capital spending and amortization over the next five years, reflecting higher federal capital investment and better data. That adds context for companies pursuing long‑cycle projects in energy, transportation, and defence supply chains. 

What Business Groups Are Asking For 

Recent pre‑budget submissions from the Canadian Chamber of Commerce call for policies that boost productivity, lower regulatory friction, and strengthen trade infrastructure. Expect Budget 2025 debates to test how the operating‑versus‑capital split supports those goals without adding complexity. 

“Many businesses did not come back after the 2008–2009 recession … we must go ‘All-In’ on lowering taxes, reducing red tape, and improving our trade infrastructure.” 
– Candace Laing, President and CEO, Canadian Chamber of Commerce 

What This Means for Business Planning 

If your Canadian business relies on federal or cost‑shared programs, build shovel‑ready proposals now with clear capital outputs, workforce training plans, and private sector co‑investment. Additionally, your business can begin to summarize how your project advances productivity and export capacity and track the “eligibility” test in the capital framework, as conditional grants and capital‑linked tax credits could be prioritized. 

Quick Takeaways for Finance Leaders 

• SR&ED and clean economy incentives are the biggest near‑term levers for corporate after‑tax returns. Prepare models and evidence ahead of Budget Day.  
• Indirect tax and digital asset reporting requirements are expected to continue to tighten, especially for platform‑mediated transactions. Confirm your data lineage. 
• Capital budgeting is now its own federal story arc. Position projects that create durable assets, measurable productivity gains, and private capital crowd‑in. 

Preparing for Budget 2025 

Budget 2025 will be a structural shift toward capital formation, paired with targeted tax changes that could reshape how projects are financed and delivered across the manufacturing, energy, technology, life sciences, real estate, and food processing sectors. 

Canadian businesses can use the next few weeks to lock in scenarios, update cashflow (after‑tax) forecasts, and prepare project files that can move when details are announced. 

On November 5, experts from every Ryan Canada practice will host a next-day virtual roundtable to dissect what changed and what those changes mean for Canadian businesses, and offer practical insight on next steps for taxpayers. We’ll cover corporate income tax, including SR&ED and other tax credits, indirect taxes, customs duty, real property valuation, and government funding. Save your spot (or sign up for email alerts) via the official registration page!