The deadline for sending feedback is 12 September 2025.
Canada’s Department of Finance has unveiled draft legislation for consultation on 15 August 2025, aimed at implementing various previously announced and additional tax measures.
The draft rules include measures that will:
- Expand what qualifies as an eligible small business corporation share and relax certain conditions for the rule on the capital gains rollover on business investment to apply, as announced in the 2024 Fall Economic Statement.
- Add a CAD 10 million capital gains exemption for qualifying sales of businesses to worker co-ops and make technical changes to the existing exemption for sales to employee ownership trusts, as announced in Budget 2024.
- Increase the annual expenditure limit and taxable capital phase-out thresholds for the enhanced 35 per cent scientific research and experimental development investment tax credit, extend the refundable credit to small public corporations, and reinstate the availability of the credit for capital expenditures, as announced in the 2024 Fall Economic Statement.
- Enhance the reporting requirements for non-profit organisations to improve transparency in the sector, as announced in the 2024 Fall Economic Statement.
- Implement the Organisation for Economic Co-operation and Development’s Crypto-Asset Reporting Framework in Canada, with attendant adjustments to the Common Reporting Standard, as announced in Budget 2024.
- Provide the Canada Revenue Agency with enhanced audit powers to more easily obtain information, including through a new penalty for non-compliance, as announced in Budget 2024.
- Provide an exemption from the excessive interest and financing expenses limitation (EIFEL) rules for debt used to fund the acquisition, construction or conversion of purpose-built residential rental buildings, as announced in Budget 2024.
- Provide an exemption from the EIFEL rules for debt used to fund a regulated energy utility business carried on in Canada, as announced on 12 August 2024.
- Implement the remaining portion of the substantive Canadian-controlled private corporations measure relating to the passive income of foreign affiliates, as proposed in Budget 2022.
- Introduce routine technical amendments to ensure Canada’s tax laws align with their underlying policy objectives.
The government invites all interested Canadians and stakeholders to provide feedback on these draft legislative proposals by emailing their comments to consultation-legislation@fin.gc.ca by 12 September 2025.
The Department of Finance also posted draft legislative proposals to amend the Goods and Services Tax/Harmonised Sales Tax rules in the Excise Tax Act to allow input tax credits for redeemed coupons to be available only for payments made exclusively in the course of commercial activities, in response to a recent Federal Court of Appeal decision.
This proposed amendment would apply effective 16 August 2025 and in respect of any input tax credits for payments made not already claimed in a return filed on or before 15 August 2025. Guidance on other previously announced measures will follow at a later date.
