Corporate Tax Rates and Legislation: Q1 2025 Accounting status

Legislative changes — January 1 to March 31, 2025

Legislative developments from January 1 to March 31, 2025, that affect income taxes, are outlined below.

Federal parliament prorogued and federal election to be held

On January 6, 2025, Prime Minister Justin Trudeau announced that his request to prorogue Parliament until March 24, 2025 had been granted and that he would resign as Prime Minister once the Liberal Party of Canada selected a new leader. Mark Carney was sworn in as Prime Minister on March 14, 2025, and on March 23, 2025, he asked the Governor General to dissolve Parliament and called a federal election for April 28, 2025. Before Parliament was prorogued, many tax proposals had been announced, but not enacted. For more information on the status of outstanding tax proposals, see our Tax Insights “Parliament has been prorogued: Status of outstanding tax proposals” (March 27, 2025 update).

Capital gains taxation

On January 31, 2025, the government announced that the effective date of the 2024 federal budget proposal, that increases the capital gains inclusion rate from ½ to ⅔, would be deferred from June 25, 2024 to January 1, 2026. Then, on March 21, 2025, Prime Minister Carney announced that the federal government will cancel the proposed increase in the capital gains inclusion rate. Accordingly, the Canada Revenue Agency (CRA) will:

• revert to administering the capital gains inclusion rate at ½
• coordinate corrective reassessments for corporations that have filed their T2 returns reporting capital gains using the proposed ⅔ inclusion rate

For more information, see our Tax Insights “Finance releases draft legislation to increase the capital gains inclusion rate” (March 27, 2025 update).

Status: As at March 31, 2025, the proposed changes related to the capital gains inclusion rate are no longer being implemented. The decision to abandon the proposal should have no accounting implications, given that the proposed changes were never considered substantively enacted for Canadian GAAP or enacted for US GAAP.

Charitable donations

On January 23, 2025, the Department of Finance released draft legislative proposals to extend the deadline for making donations eligible for tax relief in the 2024 tax year, until February 28, 2025. This had previously been announced by the Department of Finance on December 30, 2024. For more information, see our Tax Insights “Deadline extended to February 28, 2025 for making charitable donations eligible for the 2024 tax year relief.” 

Status: As at March 31, 2025, these proposals have not been tabled as a bill in the House of Commons and therefore are not considered substantively enacted for Canadian GAAP or enacted for US GAAP.

Electric vehicle (EV) Supply Chain Investment Tax Credit (ITC)

On February 21, 2025, the Department of Finance released draft legislative proposals to implement the EV Supply Chain ITC, a refundable ITC equal to 10% of the capital cost of eligible new property (i.e. buildings used in qualifying EV supply chain segments in Canada). For more details of this ITC, which was a 2024 federal budget proposal, see our Tax Insights “2024 Federal Fall Economic Statement: Tax highlights.”

Status: As at March 31, 2025, these proposals have not been tabled as a bill in the House of Commons and therefore are not considered substantively enacted for Canadian GAAP or enacted for US GAAP.

Quebec Information Bulletin 2025-1

On February 3, 2025, Quebec’s Ministère des Finances released Information Bulletin 2025-1 “Harmonization of the Québec tax system with certain measures announced by the Government of Canada and other measure.” Among other measures, Information Bulletin 2025-1 states that Quebec’s tax system will harmonize with the federal proposals that:

• defer the effective date of the proposed increase to the capital gains inclusion rate (the January 31, 2025 government announcement, see above)
• extend the deadline for charitable donations to be eligible for tax relief for the 2024 taxation year (see above)

Status: As at March 31, 2025, these proposed measures have not been tabled as a bill in the Quebec legislature and therefore are not considered substantively enacted for Canadian GAAP or enacted for US GAAP.

Trade tariffs and government support

Several executive orders issued by United States President Donald Trump since his January 20, 2025 inauguration impose tariffs on certain goods imported from Canada. The Canadian government has responded with a series of retaliatory measures, including imposing its own surtax on a list of US goods, and by providing government support to certain Canadian business sectors. Additional US tariffs are expected to be announced early April 2025. For more information on the current tariff situation and to help your business assess and manage these tariffs, visit our Tariffs and Trade Policy Resource Centre.

On March 21, 2025, Prime Minister Mark Carney announced measures intended to support businesses affected by the tariffs, one of which includes deferring corporate income tax payments and goods and services tax/harmonized sales tax (GST/HST) remittances from April 2 to June 30, 2025. The CRA later clarified that it will also, between April 2 and June 30, 2025:

• waive interest on GST/HST and corporate income tax instalment and arrears payments payable during the period
• provide interest relief on existing GST/HST and corporate income tax balances

Businesses must continue to file their returns by the usual deadlines. Interest will resume starting July 1, 2025. Revenu Québec announced that it will harmonize with these measures for corporate income tax and Quebec sales tax. For other federal and provincial/territorial tariff-related support programs, see Tariff relief: Unlocking government support.

Status: These payment and remittance deadline extensions and interest relief are administratively granted by the CRA and Revenu Québec and do not require legislation to enact them.    

Provincial/territorial budgets

The following provinces and territories introduced budgets from January 1 to March 31, 2025. None of these budgets announced changes to general and M&P corporate income tax rates. Visit www.pwc.com/ca/taxinsights for key changes respecting:

• Alberta – See our Tax Insights “2025 Alberta budget: Tax highlights”
• British Columbia – See our Tax Insights “2025 British Columbia budget: Tax highlights”
• Manitoba – See our Tax Insights “2025 Manitoba budget: Tax highlights”
• New Brunswick – No key changes
• Northwest Territories - No key changes
• Nova Scotia – See our Tax Insights “2025 Nova Scotia budget: Tax highlights”
• Nunavut - No key changes
• Quebec – See our Tax Insights “2025-2026 Québec budget: Tax highlights”
• Saskatchewan – No key changes
• Yukon - No key changes

Status: As at March 31, 2025, some of the provinces and territories (e.g. Alberta, British Columbia, Manitoba, Nova Scotia and Saskatchewan – see Table 1 below) have tabled legislation to implement certain budget measures, but none of the measures relate to general corporate income tax changes.

> Back to top

Accounting updates — January 1 to March 31, 2025

There were no significant updates relating to the accounting for income tax.

> Back to top

Federal and provincial/territorial bills 

Table 1 lists key bills that include corporate income tax rate changes or other income tax changes (e.g. for research and development) that were:

• tabled or received royal assent during 2025, or
• tabled before 2025, but did not receive royal assent before 2025

Table 1: Federal and provincial/territorial bills
Bolded rows indicate a change in status from January 1 to March 31, 2025.

> Back to top

Corporate income tax rates—accounting status (January 1, 2022 to March 31, 2025) 

The following information excludes Canadian-controlled private corporation small business rates and thresholds.

Table 2: Corporate income tax rates—accounting status
There were no changes in status from January 1 to March 31, 2025.

> Back to top