On March 14, 2025, Mark Carney was sworn in as the Prime Minister of Canada. Since then, he has released several significant statements affecting the tax landscape as we continue to navigate a prorogued, and now dissolved, government.
Capital gains inclusion rate change
On March 21, Prime Minister Carney announced the government will “cancel” the proposed hike in the capital gains inclusion rate. This had previously been postponed to Jan. 1, 2026, so this brings welcomed closure to a controversial proposed tax change.
Lifetime capital gains exemption
In the same announcement, Prime Minister Carney reaffirmed support for the increase to the lifetime capital gains exemption to $1,250,000.
Elimination of GST for first‑time homebuyers
On March 20, Prime Minister Carney announced the Government of Canada will eliminate the Goods and Services Tax (GST) for first‑time homebuyers on homes at or under $1 million. This proposed tax cut will save homebuyers up to $50,000.
Supporting workers and businesses affected by tariffs
On March 21, Prime Minister Carney met with provincial and territorial premiers and shared his plan to build one strong Canadian economy.
To support workers, the government will:
- Temporarily waive the one‑week employment insurance (EI) waiting period.
- Suspend rules around separation for a six‑month period, so workers do not have to exhaust severance pay before collecting EI.
- Make EI access easier by increasing regional unemployment rate percentages.
To support businesses, the government will:
- Defer corporate income tax payments and GST/HST remittances from April 2 to June 30, 2025, providing up to $40 billion in liquidity to businesses.
- Deploy a new financing facility for businesses.
- Provide more funding to Canada’s regional development agencies, so they can better support businesses.
As more information about the financing facilities and fundings becomes available, it will be shared. Information on these initiatives are now becoming available on the Canada Revenue Agency website, and hopefully Service Canada will soon follow.
National trade and economic corridor
During their meeting, the prime minister and premiers agreed that by working together to unlock economic projects and remove barriers, Canada can more than offset the effects of U.S. tariffs – creating higher‑paying jobs, maximizing our economic potential and becoming stronger at home and abroad.
To that end, Prime Minister Carney outlined a suite of measures to develop a national trade and economic corridor. This corridor will drive investment, create jobs and build economic growth. It will include:
- Creation of a First Mile Fund, building transportation networks to connect energy extraction sites to rail lines and roads. By providing capital to finance these key infrastructure projects across the country, the government’s aim is to expedite construction and create a more integrated and accessible Canadian economy.
- A “one window” approval process, streamlining approvals for large‑scale, national interest infrastructure projects. This measure will create clear, predictable and efficient review processes – with the highest safety standards, environmental protection and Indigenous consultation – reducing uncertainty for investors.
- A contribution agreement of up to $200 million toward the construction, commissioning and operation of a new Indigenous majority‑owned Cedar LNG processing facility. A partnership between the Haisla Nation and Pembina Pipeline Corporation, this project will create hundreds of highly skilled construction and trades jobs, generate more than $275 million in economic growth and get Canadian energy to domestic and international markets.
- A $175 million investment in the Hudson Bay Railway and at the Port of Churchill in Manitoba. This critical investment in Canadian trade and railway infrastructure will expand and open new transportation corridors, bolster economic growth and reconciliation in the Canadian Arctic and North, and get Canadian products to global markets.
Furthermore, Prime Minister Carney stressed the need to remove interprovincial trade barriers. To build a stronger and fairer economy, he committed to tabling legislation by July 1, 2025 to eliminate all federal barriers to interprovincial trade and labour mobility and remove all federal exemptions under the Canada Free Trade Agreement.
These are significant and wide‑ranging initiatives, likely forming the basis of proposed investment should this government table a budget in 2025.
Next steps
Contact your Baker Tilly advisor to learn more about how we can help you navigate the complexities of the Canadian tax system.
Information is current to March 28, 2025. The information contained in this release is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.
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