Canada’s Finance Minister proposed the measures on 27 May 2025.
Canada’s Finance Minister, François-Philippe Champagne, has tabled a notice of Ways and Means Motion in Parliament on 27 May 2025, proposing GST relief for first-time homebuyers, repealing the consumer carbon price, and reducing taxes for middle-class Canadian citizens.
The Department of Finance also issued a release outlining the plan on the same day.
GST rebate for first-time home buyers
Announced by Prime Minister Mark Carney on 20 March 2025, the federal government is introducing a GST rebate for first-time homebuyers to improve housing affordability and boost new home construction.
Carney announced that the government will eliminate the Goods and Services Tax (GST) for first-time homebuyers on homes at or under CAD 1 million, which will save Canadians up to CAD 50,000.
In the backgrounder, the Department outlined that first-time homebuyers may qualify for the rebate if they meet the eligibility criteria:
- Buy a new home from a builder;
- Build, or hire someone else to build, a home on land you own or lease; or
- Buy shares of a co-operative housing corporation.
The FTHB GST Rebate will apply to the same types of housing and apply similar eligibility criteria and conditions as the existing GST/HST New Housing Rebate, with certain modifications to ensure that the rebate is targeted at first-time home buyers.
To be considered a “first-time home buyer” for the purposes of the FTHB GST Rebate, an individual would generally need to meet the following conditions:
- be at least 18 years of age;
- be either a Canadian citizen or a permanent resident of Canada; and
- not have lived in a home, whether in or outside Canada, that they owned or that their spouse or common-law partner owned in the calendar year or in the four preceding calendar years.
Together with the existing GST/HST New Housing Rebate (where that rebate is applicable), the FTHB GST Rebate would provide for a rebate of 100% of the GST on new homes valued up to CAD 1 million.
The FTHB GST Rebate would be phased out in a linear manner for new homes valued between CAD 1 million and CAD 1.5 million. For example, under the linear phase-out, a home valued at CAD 1.25 million would be eligible for a 50% GST rebate (a rebate of up to CAD 25,000).
No FTHB GST Rebate would be available for new homes valued at or above CAD 1.5 million.
The measure is expected to save CAD 3.9 billion in taxes over 5 years and will be available until 2031, with construction allowed until 2036.
Repeal of consumer carbon price
The Government is proposing legislative amendments that would permanently repeal the fuel charge framework under Part 1 of the Greenhouse Gas Pollution Pricing Act (GGPPA) in the following four phases to ensure an orderly process for charge payers. These proposed amendments follow the regulations made in March that already ceased the application of the federal fuel charge, effective 1 April 2025.
In the backgrounder, the federal government announced that the repeal will be carried out in four distinct phases:
- Phase 1: Charging Provisions Repealed, effective 1 April 2025;
- Phase 2: Rebate Provisions Repealed, effective 1 October 2025;
- Phase 3: Registration Provisions Repealed, effective 1 November 2025;
- Phase 4: Remaining Provisions Repealed, effective 1 April 2035.
Middle-class tax cut
The government announced it is moving forward with the proposal to deliver tax relief to Canadians by reducing the lowest marginal personal income tax rate from 15% to 14%, effective 1 July 2025.
The maximum tax savings will be CAD 420 per person and CAD 840 per couple in 2026. As a result of this measure, hardworking Canadians will save over CAD 27 billion over five years, starting in 2025-26.
