Canadian tax changes to watch for under a new liberal government

Executive summary

A new Liberal minority government led by Prime Minister Mark Carney could result in significant tax policy changes aimed at providing relief to middle-class families, stimulating the housing market and fostering innovation—as well as responding to ongoing U.S. tariff tensions. As the new government takes shape, monitoring the implementation of its campaign proposals will be critical for businesses and individual taxpayers.

Canadians can anticipate a range of tax changes following a Liberal Party win in the federal election.

At the head of the minority government, Prime Minister Mark Carney will need to collaborate with other parties to deliver on his campaign pledges of providing relief to middle-class families, tackling housing affordability and fostering innovation and investment in key sectors.

While the Liberal platform contained unique elements, there are notable similarities with the other political parties’ campaign pledges, including:

• Reducing the lowest income tax bracket.

• Eliminating the indirect goods and services tax (GST) for first-time homebuyers.

• Stimulating investment through the expansion of existing tax credits within the energy sector.

• Reducing the requirements of the current registered retirement income funds (RRIFs) and increasing the guaranteed income supplement (GIS).

Other measures proposed by the Liberal government encompass a range of tax incentives designed to stimulate economic growth, support diverse industries, and provide relief across different sectors. This is particularly pressing amid ongoing trade tensions with the U.S.; Carney focused his platform on addressing U.S. tariffs and other cross-border concerns.

Based on the Liberals’ election platform, businesses should prepare to capitalize on these potential measures:

• Introducing the allowance for multi-unit rental building owners to qualify for the accelerated capital cost allowance to help offset other income, effective for the 2025 taxation year.

• Expanding current existing clean energy tax credits and de-risking investments in critical mineral extraction and exploration.

• Reintroducing the 1970s multiple unit residential building (MURB) tax incentive program to encourage rental property construction.

• Increasing the expenditure limit for the scientific research and experimental development (SR&ED) investment tax credit  from $3 million to $6 million, effective July 1, 2025.

• Implementing a patent box regime to help reduce corporate income tax rates.

• Introducing a capital gains deferral to private owners of existing residential or non-residential buildings if they sell to a non-profit operator, land trust or non-profit acquisition fund—under the condition that the seller reinvests the proceeds into new purpose-built rental housing, effective July 1, 2025 to June 30, 2035.

New government, new tax policy

These proposed changes introduced by a Carney-led government could stimulate economic growth across various industries—but the limitations of a minority government mean the Liberals will need to garner votes and support from other political parties.

Businesses should remain vigilant regarding the introduction of any new measures as they could significantly affect investment tax incentives and contribute to their growth and success moving forward.

Some of these measures could be included in an upcoming federal budget. While the date of its announcement is not confirmed, it will likely provide further details on how the Liberal government intends to fulfil its campaign promises.