Budget Law Delivers Credits, Housing, Open Banking

Summary#

The Budget 2025 Implementation Act, No. 1 is an omnibus bill that puts many parts of the federal budget into law. It changes taxes and credits, creates new national programs and rules, funds housing, and updates financial and consumer protections.

Key changes include:

• Taxes: raises the Lifetime Capital Gains Exemption to $1.25 million (from June 25, 2024), creates a $10 million capital gains exemption for selling a business to a worker co‑op or employee trust, expands disability tax relief, and introduces a temporary Personal Support Workers Tax Credit (up to $1,100 a year for 2026–2030).
• Housing: ends the Underused Housing Tax starting in 2025; speeds up tax write‑offs for purpose‑built rentals (10% accelerated CCA); extends the enhanced GST rental rebate to co‑ops and student housing; creates “Build Canada Homes” with up to $11.5B to support building.
• Clean economy: launches a 15% Clean Electricity Investment Tax Credit; extends and expands other clean technology, carbon capture, and critical mineral credits; brings back accelerated depreciation and immediate expensing for productivity assets.
• Consumer protections: creates a national “consumer‑driven banking” (open banking) framework; requires banks to add tools to fight consumer‑targeted fraud and give faster access to cheque deposits.
• New national programs and laws: enacts the National School Food Program Act; creates a Stablecoin Act to regulate Canadian‑facing stablecoin issuers; lays the legal groundwork for a high‑speed rail network in Quebec–Ontario.
• Other notable moves: repeals the Digital Services Tax; ends the Luxury Tax on aircraft and vessels; lets Canada Post set its own rates; increases Canada Infrastructure Bank’s capital authority to $45B.

What it means for you#

• Households and taxpayers

  • More children should get free or low‑cost meals at school over time under the National School Food Program. (Funding approach set in law; amounts to follow through agreements.)
  • If you receive the Canada Disability Benefit, it won’t count as income for tax or benefits.
  • Some medical and assistive devices now qualify for tax relief under the Disability Supports Deduction.

• Workers and students

  • Personal Support Workers may claim a refundable credit up to $1,100 a year (5% of eligible earnings) for 2026–2030.
  • Faster access to funds after cheque deposits; banks must let you set transaction limits and notify you of account changes.
  • Consumer‑driven (open) banking will let you securely share your financial data to switch providers or use budgeting apps, with accreditation and security rules.

• Small business owners and entrepreneurs

  • Lifetime Capital Gains Exemption increased to $1.25M; new, time‑limited $10M exemption when selling to a worker co‑op or employee ownership trust (with safeguards and potential clawbacks).
  • Immediate expensing returns for certain productivity‑boosting assets; accelerated write‑offs for clean tech and rentals.
  • Expanded SR&ED access and thresholds; renewed mineral exploration credits and critical mineral support.

• Renters, builders, and homeowners

  • More purpose‑built rental projects could pencil out due to a 10% accelerated write‑off and GST rental rebate expansion to co‑ops and student residences.
  • The Underused Housing Tax ends from 2025 onward; filing and payment stop after 2024.

• Travelers and consumers

  • Luxury Tax ends on private aircraft and boats; LNG export licenses can run up to 50 years.
  • Stricter rules against interference with drones; more aviation safety and security updates.
  • Canada Post will set postage rates directly (still publicly available).

• Crypto and fintech users

  • Stablecoin issuers that serve Canadians must meet reserve, redemption, security, and reporting rules; paying interest on stablecoins is banned.
  • Open banking creates a registry and complaint system, with the Bank of Canada supervising participants.

• Communities and regions

  • Legal framework to advance high‑speed rail in Quebec–Ontario, including land tools, impact assessments by segment, and Indigenous knowledge protections.
  • Federal credit unions get growth support and more flexible transactions.

Expenses#

No publicly available information.

Proponents' View#

• Helps address housing supply by speeding up rental construction write‑offs, expanding GST rental rebates, and creating a national homebuilding vehicle (Build Canada Homes).
• Makes Canada more competitive by lowering the cost of investing (expensing, accelerated CCA) and scaling clean electricity and clean tech with new/expanded tax credits.
• Supports workers and vulnerable groups: school food program for kids, tax relief for disability supports, and a credit for personal support workers.
• Modernizes finance with safer open banking and clearer stablecoin rules, while adding strong consumer fraud protections at banks.
• Simplifies by repealing the Digital Services Tax (reduces trade friction) and the Underused Housing Tax (cuts compliance burden for owners).
• Encourages broad‑based employee ownership and succession through new tax incentives for sales to worker co‑ops and employee trusts.

Opponents' View#

• Cost and foregone revenues: many new credits and repealed taxes (UHT, luxury tax on aircraft/vessels, DST) may reduce revenues without clear offsets.
• Fairness concerns: higher capital gains exemption and $10M business‑sale exemption may mainly benefit high‑wealth owners; scrapping UHT could undermine housing vacancy policy; ending the luxury tax aids wealthy buyers.
• Consumer and financial risks: open banking and stablecoins add new operational and cyber risks; oversight is complex and still evolving.
• Climate and energy: extending carbon capture credits and 50‑year LNG export licenses may lock in fossil infrastructure; critics may prefer stronger demand‑side measures.
• Implementation risks: school food program sets vision and principles but leaves funding amounts to later agreements; housing buildout depends on provincial/municipal cooperation and market capacity.
• High‑speed rail and Canada Post: rail land powers and costs may face public opposition; Canada Post rate‑setting autonomy could lead to higher postage without enough oversight.