Briefing binder created on the occasion of his appearance at Committee of the Whole on June 10, 2025 on the Main Estimates 2025-26

Remarks for the Minister of Finance

Committee of the Whole (10 minutes)
Main Estimates
House of Commons – June 10, 2025

Introduction

Thank you, Mr. Chair, for the opportunity to speak at today's Committee of the Whole.

In particular, I would like to discuss some of the spending measures outlined in the Main Estimates that are helping to support Canadians at a time of great economic volatility, while preparing us for the opportunities ahead.

From increasing federal transfers that uphold the core Canadian values of equal opportunity and social stability – to helping Ukraine in its fight against Russia's war of aggression – and investing in the infrastructure projects that transform our communities for the better, our government is delivering the change Canadians want and deserve.

I look forward to outlining these measures further as they pertain to building a greater, more inclusive, and more robust economy for everyone.

Stronger social funding for Canadians 

Mr. Chair, our government is committed to helping provinces and territories deliver the social programs and supports Canadians need to maintain their financial, personal, social and emotional well-being, regardless of where they live.

That's why the Canada Health Transfer (CHT) will increase by $2.6 billion to help alleviate immediate pressures in health care systems across Canada and ensure more Canadians can go to the hospital, receive emergency care and see a doctor – quickly and efficiently. This increase reflects the 5 per cent minimum growth rate until 2027-28 guaranteed by the federal government in February 2023.

The Canada Social Transfer (CST) will increase by $507 million, as a result of the legislated 3 per cent annual growth rate. The CST is intended to support three broad areas of social programs: post-secondary education, social assistance and social services, as well as early childhood development and early learning and child care, which all contribute to improving social determinants of health from coast to coast to coast. 

Together, these transfers will promote more equity, boost social cohesion, and support the comprehensive safety net so vital to the Canadian way of life.

Addressing fiscal disparities among provinces and territories

Mr. Chair, I think we can all agree that people in one part of the country shouldn't have to pay more to receive the same basic services compared with their fellow Canadians in other parts of the country.

It's why we have Equalization and Territorial Formula Financing which, as you know, provide funding from federal revenues to provinces and territories with weaker ability to raise revenues, ensuring these regions can provide reasonably comparable services at reasonably comparable levels of taxation. Territorial Formula Financing also takes into account the higher cost of delivering services in the North.

We're increasing Fiscal Equalization by nearly $917 million and territorial financing by almost $330 million, so that we can continue promoting equity across the nation.

Supports for Ukraine

Another increase that is important to mention, Mr. Chair, is the provision of $200 million to the World Bank's Financial Intermediary Fund for Ukraine, which will help support the country as Ukraine's courageous fight against Russia's illegal invasion continues.

This is part of Canada's contribution through the G7 Leaders' Extraordinary Revenue Acceleration Loan Initiative, and will be used to support projects, programs and activities that address Ukraine's budget, recovery and reconstruction needs. 

Investing in the Canada Infrastructure Bank

Finally, Mr. Chair, I'd like to touch on an important increase in the Main Estimates to the Canada Infrastructure Bank, which was established to ensure all Canadians can benefit from modern and sustainable infrastructure through partnerships between the private sector and all levels of government.

Specifically, the federal government can provide up to $35 billion to the Canada Infrastructure Bank to invest in priority sectors, including transit, green infrastructure, clean power, broadband access, trade and transportation.

In making this investment, we will build a stronger, more inclusive and more sustainable Canada for generations to come.

Recent investments in affordability

Before I conclude, Mr. Chair, I'd like to highlight some crucial measures this new government is taking to make life more affordable while building a single, interconnected and resilient Canadian economy.

To make buying a new home easier and to boost the construction of new homes across the country, the government is eliminating the Goods and Services Tax (GST) for first-time home buyers on new homes up to $1 million and reducing the GST for first-time home buyers on new homes between $1 million and $1.5 million. As a result, first-time home buyers will be able to save up to $50,000 on a new home, which could deliver $3.9 billion in tax savings to Canadians over the next five years.

We're also moving forward with our proposal to reduce the lowest marginal personal income tax rate from 15 per cent to 14 per cent, effective July 1, 2025, which will bring much-needed tax relief to nearly 22 million Canadians and their families, delivering $27 billion in tax savings to Canadians over the next five years.

And to make Canada's carbon pricing system fairer and more effective, the Government of Canada introduced regulations that end the application of the federal fuel charge, effective April 1, 2025, and removed requirements for provinces and territories to have a consumer-facing carbon price.

Conclusion

Mr. Chair, the measures in the Main Estimates presented before the committee today are important parts of the federal government's plan to put people first, and to build a single, hyperconnected economy where everyone has a real and fair chance at success – the strongest in the G7.

We're ensuring Canadians receive the health and social services they need to thrive.

We're supporting Canadians through the current global challenges we face by cutting taxes and making housing more affordable.

We're catalyzing infrastructure investment and creating well-paying jobs across the country.

Most importantly, we're positioning Canada for global success.

Thank you for the opportunity to make my views on these matters known, Mr. Chair.

2025-26 Main Estimates Overview

Issue

The 2025-26 Main Estimates identify total budgetary requirements of $149.8 billion for the Department of Finance.

Of this amount, 99% or $149.5 billion relates to statutory items that have already been approved by Parliament through enabling legislation including a number of significant expenditures like the Canada Health Transfer, the Canada Social Transfer, the Fiscal Equalization Payments, and the Interest on Unmatured Debt.

The voted program expenditures of $354.8 million covers the day-to day-operations of the Department of Finance and includes transfer payments, salaries, and goods and services.

Background

There is a net increase of $6.6 billion in budgetary statutory payments in 2025–26 compared to the 2024–25 Main Estimates. This increase is primarily attributable to the following items:

• A $2.6 billion or 5% increase in the Canada Health Transfer, representing the 5% minimum growth rate guaranteed by the federal government in February 2023;
• A $1.9 billion increase in Interest on Unmatured Debt, reflecting the revised projections as noted in the 2024 Fall Economic Statement;
• A $916.9 million increase in Fiscal Equalization payments which reflects the 3.6% GDP-based escalator applied to the 2024–25 level. These payments evolve annually based on a three-year moving average of nominal GDP growth;
• A $612.0 million increase in Other Interest Costs, reflecting updated modelling and revised interest rate assumptions as provided in the 2024 Fall Economic Statement;
• A $507.3 million increase in the Canada Social Transfer, aligning with the legislatively mandated 3% annual growth in funding;
• A $329.9 million increase in Territorial Financing reflective of the integration of new and updated data for territorial expenditures requirements and revenue capacities into the program's legislated formula; and
• A $200 million payment to International Bank for Reconstruction and Development Financial Intermediaries Fund for Ukraine. This new item is part of Canada's contribution through the G7 Leaders Extraordinary Revenue Acceleration Loan Mechanism to be used to support projects, programs, and activities that address Ukraine's budget, recovery, and reconstruction needs.

The 2025-26 Main Estimates reflect a net increase of $209.6 million in voted budgetary expenditures since the 2024-25 Main Estimates. This is primarily attributable to a $193.8 million nonrecurring transfer payment to Newfoundland and Labrador.

Financial Transactions and Reports Analysis Centre of Canada - 2025-26 Main Estimates

Key points

• Financial Transactions and Reports Analysis Centre of Canada's (FINTRAC) total funding sought in the 2025-26 Main Estimates is $108,984,518.
• Statutory authorities include revenues of $60.5 million following the implementation of the new assessment of expenses funding model following amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. Prescribed Reporting Entities (RE) regulated under the Act pay an annual assessment to cover the costs of the Supervision function of the Centre. The balance of statutory authorities relates to the Employee Benefits Plan (EBP).

Background

Main Estimates 2025-26

• The $109.0 million in funding for 2025-26 is an increase of $4.9 million compared to the 2024-25 Main Estimates ($104.1M). This increase in funding is primarily attributable to:
  • An increase of $11.7 million due to the increased cost of business and planned modernization investments in the Supervision function and related activities;
  • An increase of $5.3 million announced in Budget 2024 to enhance FINTRAC's cyber resiliency and ensure the implementation of additional data security safeguards;
  • An increase of $1.3 million to align salaries with core public service rates;
  • An increase of $1.3 million related to statutory items; offset by
    • A decrease of $10.0 million based on the funding profile of initiatives announced in Budget 2022 to strengthen Canada's Anti-Money Laundering and Anti-Terrorist Financing Regime;
    • A decrease of $4.0 million based on the funding profile of initiatives announced in the July 2020 Economic and Fiscal Snapshot for fighting financial crime, relocation, and modernizing the cross-border currency reporting framework;
    • A decrease of $0.4 million following transfers with other government departments; and
    • A decrease of $0.3 million as announced in Budget 2023 due to the refocusing of government spending.

• Including statutory authorities for EBP, personnel accounts for 70% of FINTRAC's budget.
• The remaining 30% is operation and maintenance (O&M) ($33M).
• 90% of the O&M budget consists of:
  • Professional and Special Services ($18M or 55%);
  • Rentals ($8.6M or 26%).
  • Acquisition of machinery and equipment ($3.1M or 9%);

• Professional and special services: This broad category includes, but is not limited to legal service fees, consulting fees, security services, translation services, professional services, training, membership fees, and other types of services. A significant portion of the Professional and Special Services is linked to funding received in Budget 2022 to strengthen Canada's anti-money laundering and anti-terrorist financing regime and in Budget 2024 to enhance FINTRAC's cyber resiliency and ensure the implementation of additional data security safeguards.
• Rentals: FINTRAC's O&M authorities are unique in that FINTRAC is a fully reimbursing client of PSPC. FINTRAC pays for the accommodations costs for the headquarters in Ottawa and the three regional offices in Vancouver, Toronto and Montreal directly out of the operating budget.
• Acquisition of machinery and equipment: This category includes, but is not limited to, purchases of office furniture furnishing (e.g. desks), computer equipment (e.g. keyboards, mobile phones), and application software purchases.

Office of the Auditor General - 2025-26 Main Estimates

Issue

The Auditor General is an officer of Parliament whose work and responsibilities are independent of the government. The Office of the Auditor General of Canada is the legislative audit office of the federal government and of the three northern territories.

The Minister of Finance and National Revenue is the Minister responsible for the Office of the Auditor General.

The Office's 2025-26 authorities are $136.2 million – an increase of almost 7 per cent from 2024-25.

Key points

• The Office of the Auditor General fulfills an important role in ensuring transparency and accountability in the use of public funds.
• The 2025-26 Main Estimates show an increase in spending of almost 7 per cent from 2025-26, largely as a result of an increase in personnel costs.

Anticipated Questions and Answers

Does the Office of the Auditor General have sufficient funding to continue to deliver on its mandate?

The Auditor General may submit requests for incremental funding for decision by the Minister of Finance and Prime Minister as required.

Recent funding decisions in Budget 2018 and the 2020 Fall Economic Statement have provided ongoing funding to the Office to support its mandate and independently audit the use of public funds.

Background

The Auditor General is an Agent of Parliament, responsible for auditing operations of the federal and territorial government, and providing Parliament and the legislative assemblies with independent information, assurance, and advice regarding the stewardship of public funds. In supporting the Auditor General, the OAG audits:

• the federal government, including some 100 departments and agencies, ranging from small boards to large, complex organizations whose activities extend across Canada and overseas;
• some 40 Crown corporations, such as the Canadian Broadcasting Corporation and the Royal Canadian Mint; and
• the governments of Nunavut, the Yukon, the Northwest Territories, and some 20 territorial corporations and agencies.

The OAG is responsible for the annual audit of the financial statements of the Government of Canada and those of the three territories, as well as the financial statements of roughly 60 federal and territorial Crown corporations, the Canada Pension Plan, the Public Sector Pension Investment Board, and the Employment Insurance Operating Account. It also conducts a number of performance audits each year.

The OAG's authorities have increased around 60 per cent since 2017-18. Recent funding decisions have provided structural increases to the OAG's budget, including:

• $35.5 million over five years, starting in 2018-19, and $8.3 million ongoing as announced in Budget 2018, to continue delivering on an increase in audit mandates; and,
• $181.9 million over five years, starting in 2020-21, and $31.6 million ongoing, as announced in the 2020 Fall Economic Statement, to enhance its capacity and address workload pressures, such as auditing all federal programs associated with Canada's COVID-19 response.

The biggest driver of growth between 2024-25 and 2025-26 is in personnel costs for the OAG (see Table 1), which includes collective bargaining wage adjustments.

Excerpt of 2025-25 Main Estimates - OAG

Raison d'être

The Auditor General of Canada is an officer of Parliament whose work and responsibilities are independent of the government and who reports directly to Parliament. The Office of the Auditor General of Canada is the legislative audit office of the federal government and of the three northern territories. The main legislative auditing duties are financial audits, performance audits, special examinations, and sustainable development monitoring activities and environmental petitions. These audits and studies provide objective information, advice, and assurance to Parliament, territorial legislatures, governments, and Canadians. With its reports and testimony, the Office of the Auditor General assists parliamentarians and territorial legislators in their work on the authorization and oversight of government spending and operations.

The Minister of Finance is responsible for tabling the Auditor General's administrative reports in Parliament, including the Departmental Plan and Departmental Results Report.

Organizational Estimates

Table 301. Organizational Estimates (dollars) - Office of the Auditor General

		2023–24 Expenditures	2024–25 Main Estimates	2024–25 Estimates To Date	2025–26 Main Estimates
Budgetary
Voted
1	Program expenditures	121,066,602	114,689,350	114,689,350	121,233,208
Total Voted		121,066,602	114,689,350	114,689,350	121,233,208
Total Statutory		13,863,152	12,726,270	12,726,270	15,007,077
Total Budgetary		134,929,754	127,415,620	127,415,620	136,240,285

2025–26 Main Estimates by Purpose

Table 302. 2025–26 Main Estimates by Purpose - Budgetary - Office of the Auditor General

	Operating	Capital	Transfer Payments	Revenues and other reductions	Total
Legislative Auditing	138,900,285	0	0	(2,660,000)	136,240,285
Total	138,900,285	0	0	(2,660,000)	136,240,285

Listing of Statutory Authorities

Table 303. Listing of Statutory Authorities - Office of the Auditor General - Budgetary (dollars)

	2023–24 Expenditures	2024–25 Estimates To Date	2025–26 Main Estimates
Contributions to employee benefit plans	13,860,482	12,726,270	15,007,077

Office of the Superintendent of Financial Institutions - Estimates 2025-26

Issue

The Office of the Superintendent of Financial Institutions (OSFI) is seeking $1,323,899 in the 2025-26 Estimates to support operational needs of the Office of the Chief Actuary of Canada.

Key points

• The work OSFI does, except for that of Office of the Chief Actuary, is almost entirely funded through assessments on the regulated financial institutions and pension plans, a user-pay program for selected services, and revenues from cost-recovered services primarily from other government departments (OCA related). Together they fund over 99% of OSFI's costs.
• A small portion of OSFI's revenue – less than 1% – is derived from a parliamentary appropriation for actuarial valuation and advisory services provided by the Office of the Chief Actuary.
• The Office of the Chief Actuary is an independent unit within OSFI, providing support to various public sector pension and benefit plans such as the pension plans of Members of Parliament and Judges, and the Public Service Death Benefit plan, as well as large social security programs including the Canada Pension Plan, Old Age Security and Employment Insurance.
• Additional funding for the Office of the Chief Actuary is derived from direct billing of partner departments for the services provided, and from dedicated funds via established pension plans and funds.

Anticipated Questions and Answers

1. OSFI's budget is over $350 million yet you are only requesting $1.3 million in Estimates 2025-26. How do OSFI and the Office of the Chief Actuary get their funding?

OSFI is almost entirely funded through assessments on the regulated financial institutions and pension plans, a user-pay program for selected services, and revenues from cost-recovered services from other government departments (OCA related). Together they fund over 99% of OSFI's costs.

The Office of the Chief Actuary is principally funded through direct billing of partner departments for services provided. This is augmented by a small appropriation, less than 1% of OSFI's annual budget, from Government to support operational needs.

2. What is the appropriation amount used for?

The appropriation is used for actuarial and other services relating to the various public sector pension and benefit plans such as:

• The pension plan for the Federally Appointed Judges (statutory requirement),
• The pension plan for the Members of Parliament (statutory requirement),
• The Regular Force Death Benefit Account (statutory requirement),
• The Public Service Death Benefit Account (statutory requirement).

Background

• The Office of the Superintendent of Financial Institutions (OSFI) is an independent federal government agency that regulates and supervises more than 400 federally regulated financial institutions and 1,200 pension plans to determine whether they are in sound financial condition and meeting their requirements.
• OSFI's regulation and supervision activities play a key role in contributing to public confidence in the Canadian financial system.
• The Office of the Chief Actuary is an independent unit housed within OSFI that provides a range of actuarial valuation and advisory services to the federal government. This includes actuarial reports on the Canada Pension Plan (CPP), Old Age Security Program and the Canada Student Financial Assistance Program.  Although the Chief Actuary reports to the Superintendent, he or she is solely responsible for the content and actuarial opinions in the reports.
• The OSFI Act stipulates that OSFI must recover its costs. Under section 17 of the OSFI Act, the Minister of Finance may spend any revenues collected under the Act to cover the expenses associated with the operation of OSFI. This means that any increase in OSFI's costs of regulation and supervision is funded by industry and similarly, any decrease results in a lower charge to industry.
• OSFI is accountable to ensure its operating expenses and capital investments are managed prudently. Each spring, OSFI meets with industry associations to discuss and validate its most recent plans, priorities, and budgets.

Affordability Measures

Issue

The government has undertaken a number of significant initiatives in recent years to reduce everyday costs and provide relief from the rising cost of living.

Key points

• The government is helping Canadians struggling to get ahead. We are saving families of approximately 900,000 children thousands of dollars with the Canada-wide $10-a-day child care system, and we have created 95,000 new child care spaces since 2021.
• Through the Canada Child Benefit, we are helping roughly 3.5 million families with the costs of raising children by providing $28.2 billion in 2024-25. This benefit is lifting hundreds of thousands of children out of poverty.
• We are working to provide universal access to contraceptive and diabetes medications for all Canadians. This will help nine million people of reproductive age and 3.7 million Canadians living with diabetes to access the medications they need.
• We also recently expanded the Canadian Dental Care Plan. This life‑changing program saves the average person more than $800 per year. Over 4.1 million Canadians have enrolled in the Plan, and 2.0 million are already receiving essential care.
• Through the National School Food Program, we are ensuring that more children across Canada have access to the nutrition they need to reach their full potential. Our investment will provide meals to up to 400,000 more kids every year, saving the average participating family with two children $800 per year in grocery costs, with lower-income families benefitting the most.
• Over the past few years, the government has modernized Canada's competition regime to strengthen competition in our economy. Stronger competition is expected to lead to lower prices, improved services for consumers, and more innovation in the marketplace.

Background

Canada-wide Early Learning and Child Care

As part of Budget 2021 the Government committed to build a Canada-wide ELCC system with PTs. Key targets that PTs have committed to through bilateral agreements under the Canada-wide system include: 

• Reduce fees for regulated child care by 50% by December 2022 (completed); 
• Reduce fees for regulated child care to an average of $10-a-day by March 2026; and 
• Build 250,000 new regulated child care spaces by March 2026. 

PTs are on track to meet these targets by the end of their agreements on March 31, 2026. The majority have signed extension agreements for 2026-27 to 2030-31, which provide them with a 3 per cent funding top-up to sustain their systems without any additional targets. Alberta, Saskatchewan and Ontario have not yet signed extension agreements.

As of March 31, 2026, the Government will have provided over  
$35 billion for ELCC, including for Indigenous ELCC, and committed to ongoing funding of $9.2 billion annually

Canada Child Benefit

For the 2024-25 benefit year, the Canada Child Benefit provides up to $7,787 per child under the age of 6 and up to $6,570 per child aged 6 through 17. The Government provided about $28 billion in support to eligible families with children under this benefit in 2024-25. The Canada Child Benefit is legislated through the Income Tax Act and is considered an expenditure for government financial reporting purposes.

Pharmacare

Budget 2024 provided $1.5 billion over five years to support the launch of the National Pharmacare Plan. The Pharmacare Act outlines the government's vision for a national universal pharmacare program and its intention to work with PTs to implement the first phase of the program by providing universal, single-payer coverage for contraception and diabetes medications. To date Manitoba, British Columbia, Prince Edward Island and the Yukon have signed pharmacare agreements. Funding expands and enhances existing PT public drug benefit programs.

Canadian Dental Care Plan

The dental care plan is helping make the cost of dental care more affordable for eligible Canadians. The program is restricted to uninsured Canadians with a family income of less than $90,000, with no co-pays for families under $70,000. The program first launched in 2023 and was initially restricted to seniors. Program eligibility gradually expanded to persons with disabilities, children under the age of 18, and then individuals between the ages of 18 to 64. As of May 29, 2025, up to nine million uninsured Canadians of all ages can apply.

National School Food Program

In Budget 2024, the Government of Canada committed $1 billion of federal funding over 5 years through Budget 2024 to develop a National School Food Program. This funding was allocated for bilaterial funding agreements with PTs, funding for school food initiatives on First Nations reserves and for First Nations, Inuit and Métis Modern Treaty and Self-government Agreement Holders, and engagement/capacity building activities related to school food.

As of March 2025, all PTs have signed agreements under the National School Food Program. The federal government is working directly with Indigenous partners on the rollout of their funding, with more information to come.

Modernizing the Competition Framework

Through the Fall Economic Statement Implementation Act, 2023 and the Affordable Housing and Groceries Act, the Government of Canada amended the Competition Act in order to help:

• Put an end to big businesses, including grocers, leveraging contracts and leases to stifle competition;
• Stop anti-competitive mergers that raise prices and limit choices for Canadians;
• Crack down on anti-competitive practices by large dominant companies that drive up prices;
• Improve the focus on worker impacts in competition analysis; and,
• Prevent manufacturers from refusing to provide the means to repair devices in an anti-competitive manner.

Housing Affordability

Issue

High home prices, rising rents, and elevated mortgage rates have caused a deterioration in housing affordability. Lack of supply and rapid population growth due to immigration remain key issues.

Key points

• Our government has committed to making homes more affordable for Canadians. That is why one of our first actions was to table legislation to eliminate the GST for first-time home buyers on homes up to $1 million and to reduce the GST on homes between $1 million and $1.5 million.
• We have also committed to doubling the pace of residential construction over the next decade. To do this, we will create Build Canada Homes to catalyze the housing industry by providing financing and land, while sustaining demand for manufacturers through bulk purchasing.
• This builds on efforts and investments made in recent years, including to reduce local barriers to build, support more development through the tax system such as the removal of GST on purpose-built rental housing, and significantly increasing financing available to builders.
• In parallel, the government has taken steps to align permanent and temporary immigration more closely with housing capacity, such as reducing permanent resident targets by 21 per cent in 2025 and maintaining lower admissions through 2027, and capping the total number of foreign workers and international students to less than five percent of Canada's population by 2027.

Background

The government's platform included a number of significant commitments, such as to:

• Launch Build Canada Homes;
• Eliminate the GST for first-time home buyers on new homes priced up to $1 million and lower the GST for first-time buyers on homes between $1 million and $1.5 million;
• Reintroduce the Multi-Unit Rental Building (MURB) tax incentive;
• Cut municipal charges in half for multi-unit residential housing for five years by working with provinces and territories; and
• Return immigration to sustainable levels to ease the strain on housing, public infrastructure, and social services.

The federal government has invested heavily in housing in recent years, including through the measures below.

Budget 2024

• Launching a new Public Lands for Homes Plan, including a $500 million Public Lands Acquisition Fund.
• A further $15 billion in loan funding for purpose-built rentals under the Apartment Construction Loan Program, beginning in 2025-26. Combined with FES 2023 investments, this brings total program funding to over $55 billion, with the goal of supporting over 131,000 homes.
• Providing $6 billion over 10 years, starting in 2024-25, to launch a new Canada Housing Infrastructure Fund, to accelerate the construction and upgrading of housing-enabling infrastructure.
• Topping up the $4 billion Housing Accelerator Fund with an additional $400 million over four years, beginning in 2024-25, in order to fast-track 12,000 additional homes.
• A further $1 billion in funding for the Affordable Housing Fund. This brings total program funding to over $15 billion, with the goal of supporting 60,000 new housing units and renewing / repairing another 240,000.
• Announcing a new $1.5 billion Canada Rental Protection Fund to preserve and grow affordable housing supply.
• Investing $1.3 billion over four years, starting in 2024-25, in Reaching Home: Canada's Homelessness Strategy.
• Announcing $1.1 billion over five years, beginning in 2024-25, for an accelerated capital cost allowance for new purpose-built rental projects.

2023 Fall Economic Statement

• $15 billion in loan funding for purpose-built rentals under the Apartment Construction Loan Program beginning in 2025-26.
• $4.565 billion over six years to remove the GST from purpose-built rental housing beginning in 2023-24.
• $1 billion in contributions for the Affordable Housing Fund (AHF) beginning in 2025-26.
• $50 million to support municipal enforcement of restrictions on short-term rentals.
• Denial of expenses in computing income from a non-compliant short-term rental.
• $309 million in additional investments for the Co-Operative Housing Development Program beginning in 2025-26.
• Canadian Mortgage Charter, which highlights the tailored mortgage relief that the government expects banks to provide to borrowers who are facing financial difficulty with the mortgage on their principal residence (further enhanced in Budget 2024).

Managing Immigration

• The government has also taken steps to align permanent and temporary immigration more closely with housing capacity.
  • The 2025–2027 Immigration Levels Plan reduces Canada's permanent resident targets by 21% in 2025 and maintains lower admissions through 2027: 395,000 in 2025, 380,00 in 2026, and 365,000 in 2027.
  • The speech from the throne confirmed the government's intention to cap the total number of foreign workers and international students to less than five percent of Canada's population by 2027.
    • According to Statistics Canada, there were 3.0 million non-permanent residents living in Canada on January 1, 2025 (i.e. work and study permit holders and their family members, and asylum claimants), accounting for 7.3 per cent of the overall population.
• Updated immigration targets and other measures introduced in 2024 to slow the pace of immigration-driven population growth are beginning to ease pressure on housing demand. *Sentence redacted*

Removing the Consumer Carbon Price from Canadian Law

Issue

The proposed legislation would permanently repeal the fuel charge framework in Part 1 of the Greenhouse Gas Pollution Pricing Act (GGPPA). This would legislate the repeal of the consumer carbon price after regulations were made to cease the application of the fuel charge effective April 1, 2025.

Key points

• The proposed legislative amendments would repeal the fuel charge legislative framework under the Greenhouse Gas Pollution Pricing Act. These proposed amendments follow the regulations made in March that ceased the application of the federal fuel charge, effective April 1, 2025.
• This repeal would occur in four phases, starting with the retroactive repeal of charging provisions effective April 1, 2025. Other provisions would be sequentially repealed to ensure an orderly process for charge payers with respect to past reporting periods.
• The proposed amendments reflect what has already been accomplished through regulations made earlier this year.
• The proposed amendments would provide certainty to Canadian consumers and businesses about the elimination of the consumer carbon price.

Anticipated Questions and Answers

1. Why maintain industrial pollution pricing when Canadian businesses are facing severe challenges from US tariffs?

Industrial carbon pricing systems are designed to keep costs low to protect against competitiveness risks by only exposing a portion of industrial emissions to the carbon price. Independent estimates have found that this means businesses face average carbon costs of less than $10 per tonne of greenhouse gas emissions in 2024. According to independent estimates, industrial carbon pricing is the climate policy with the single largest contribution to achieving our emissions reduction targets, all while helping us transform and grow our economy.

The federal government will engage with provinces and territories to take steps to strengthen industrial carbon pricing systems.

2. What is the estimated impact of the fuel charge repeal on GST revenues?

The Department of Finance Canada does not possess data on the actual amounts of GST collected on specific goods or services. Businesses report the total amount of GST collected and remitted during a reporting period and do not report amounts in respect of specific goods and services.

Moreover, the GST is calculated on the final amount charged for a good or service, which includes other taxes, levies and charges that may be embedded in the final price, such as carbon pricing. In addition, GST may not apply to all products to which fuel is an input. For instance, approximately 20 percent of carbon pricing proceeds related to fuel used as inputs in exported products, which are zero-rated for GST purposes. For these reasons, it is therefore difficult to estimate the net impact of the fuel charge removal on overall GST revenues.

The Government of Canada did not retain the direct proceeds from the consumer carbon price. All direct proceeds from the federal fuel charge were returned to Canadians or are in the process of being returned. These amounts do not include the GST charged on products or services that may have embedded carbon pricing costs in them.

Proceeds Return to Individuals, SMEs, Farmers, and Indigenous Governments

3. In which jurisdictions was the Canada Carbon Rebate (CCR) available in 2024-25, and for the final payment in April 2025?

The CCR returned direct proceeds from the federal fuel charge to residents of provinces where the fuel charge applied. In 2024-25 these provinces were Newfoundland and Labrador, Prince Edward Island, Nova Scotia, New Brunswick, Ontario, Manitoba, Saskatchewan, and Alberta. Residents of these provinces are receiving a final CCR payment in respect of the April 2025 to June 2025 quarter.

4. Why has the government decided to pay the CCR for the April 2025-to-June 2025 quarter knowing that no fuel charge proceeds would be collected during that quarter?

The government decided to make a final CCR payment in April 2025 to eligible households. This recognizes that Canadian families, especially low-income families, were counting on the April rebate payments which would have otherwise been provided in respect of the April 2025 to June 2025 quarter.

5. How much support is the Government providing to eligible individuals via the final April 2025 CCR?

Based on the 2025-26 Main Estimates (Table 30 Listing of Statutory Authorities), it is estimated that roughly $3.5 billion would be provided via the CCR, in 2025-26, to eligible individuals and families in provinces where the federal fuel charge applied.

6. When will small and medium-sized businesses receive their share of proceeds to be returned?

With the removal of the federal fuel charge effective April 1, 2025, the Canada Carbon Rebate for Small Businesses payment in respect of the 2024-25 fuel charge year will be the final payment to eligible businesses.

The Minister of Finance will specify payment rates to return the previously specified $623.1 million in proceeds for the 2024-25 fuel charge year once sufficient information is available from the 2024 taxation year.

7. What is the status of the government's commitment to make the Canada Carbon Rebate for Small Businesses non-taxable?

The 2024 Fall Economic Statement indicated that Canada Carbon Rebate for Small Businesses payments in respect of the 2019-20 to 2023-24 fuel charge years would not be taxable.

A legislative amendment to the Income Tax Act is required to implement the proposal.

The government is currently considering the next steps in this matter.

8. What is the government's plan for the farmers tax credit?

With the removal of the federal fuel charge effective April 1, 2025, the Return of Fuel Charge Proceeds to Farmers Tax Credit in respect of the 2024-25 fuel charge year will be the final credit available to eligible farming businesses. Consequently, the Minister of Finance has specified the payment rate per $1,000 in eligible farming expenses that are incurred in the 2025 calendar year (in respect of the 2025-26 fuel charge year), in the designated provinces, to be nil.

This nil payment rate replaces the payment rate for the same calendar year (and fuel charge year) that was previously announced on January 10, 2025.

9. When will proceeds be returned to Indigenous governments?

In provinces where the fuel charge was in place, a portion of fuel charge proceeds from the price on pollution is being returned to eligible federally recognized Indigenous governments by Environment and Climate Change Canada (ECCC) through grant agreements delivered by the Fuel Charge Proceeds Fund for Indigenous Governments (FCPFIG). The FCPFIG offers maximum flexibility for eligible First Nations, Inuit, and Métis governments to manage and use their share of fuel charge proceeds towards self-determined priorities.

ECCC is continuing to work with eligible recipients to return $531.5 million in proceeds from the 2020-21 to 2024-25 period, consistent with the amounts previously specified by the Minister of Finance. The Government of Canada will continue to establish the necessary grant agreements and issue payments through the FCPFIG to eligible Indigenous governments.

Background

This measure would permanently repeal the fuel charge framework in Part 1 of the Greenhouse Gas Pollution Pricing Act (GGPPA). The measure would legislate the repeal of the consumer carbon price after regulations were made to cease the application of the fuel charge effective April 1, 2025.

The proposed amendments would come into force in four phases to ensure an orderly process for charge payers and the Canada Revenue Agency:

• In the first phase, charging provisions would be retroactively repealed as of April 1, 2025.
• In the second phase, provisions allowing for certain rebates would be repealed as of October 1, 2025. For example, this would allow charge payers to claim a rebate for fuel charge paid before April 1, 2025, on fuel that is exported on or after April 1, 2025.
• All registration provisions would be repealed as of November 1, 2025, giving registrants until October 31 to file returns to claim rebates arising before October 1.
• All remaining provisions of Part 1 of the GGPPA would be repealed effective April 1, 2035, including definitions, interpretation rules, administrative and procedural rules. This would provide continuity and certainty for final wind-down activities, including Canada Revenue Agency's processes that continue to rely on existing rules. This continuity also ensures that fuel charge payers have the ability to interact with the government in a predictable and straightforward manner in respect of any residual fuel charge obligations.

The measure does not extend to Part 2 of the GGPPA, which established an output-based pricing system on large emitters in listed jurisdictions (i.e., industrial carbon pricing).

Along with the repeal of the consumer carbon price, the government decided to make a final CCR payment in April 2025 to eligible households in provinces where the fuel charge applied. The final quarterly CCR payment was based on the estimated fuel charge proceeds that would have been collected in those provinces from April 1, 2025 to June 30, 2025 – the CCR operated as a "pre-bate". The 2025-26 Main Estimates note a cost of roughly $3.5 billion in CCR for individuals and families in 2025-26.

Other proceeds return mechanisms to small and medium-sized businesses, farmers, and Indigenous governments will be wound down.

GST Rebate for First-Time Home Buyers

Issue

The proposed bill would amend the Excise Tax Act and related regulations to implement a new GST rebate for first-time home buyers. As a result of the proposed rebate, the GST would be fully relieved for first-time home buyers on new homes up to $1 million and lowered for first-time home buyers on new homes between $1 million and $1.5 million.

Key points

• The First-Time Home Buyers' GST Rebate will lower the upfront cost of buying a new home by up to $50,000—allowing more young people and families to enter the housing market while keeping more money in their pockets.
• This measure will save first-time home buyers a total of $3.9 billion over five years.
• Eliminating the GST on new homes up to $1 million and lowering GST on new homes up to $1.5 million will also create demand for newly built homes, which could in turn help spur new construction. Expanding the housing stock is key to addressing housing affordability issues.

Anticipated Questions and Answers

1. Why is the measure restricted to first-time home buyers, why not all buyers?

The measure is intended to help first-time home buyers enter the housing market, rather than people who already own a home.

2. How much will the proposed rebate cost?

This measure is expected to deliver $3.9 billion in tax savings to Canadians over five years, starting in 2025-26.

*Table redacted*

Background

• 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 $1 million.
• The maximum FTHB GST Rebate of $50,000 would be phased out in a linear manner for new homes valued between $1 million and $1.5 million. For example, under the linear phase-out, a home valued at $1.25 million (i.e., the mid-point between $1 million and $1.5 million) would be eligible for a rebate of $25,000 (50% of $50,000).
• No FTHB GST Rebate would be available for new homes valued at or above $1.5 million.
• A first-time home buyer may be eligible for a FTHB GST Rebate if:
  • they buy a new home from a builder;
  • they build, or hire someone else to build, a home on land they own or lease; or
  • they buy shares of a co-operative housing corporation.
• To be considered a "first-time home buyer" for the purposes of the FTHB GST Rebate, an individual would generally need to:
  • 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; and
  • be at least 18 years of age and be either a Canadian citizen or a permanent resident of Canada.
• In the case of a new home purchased from a builder, to qualify for a FTHB GST Rebate, at least one of the purchasers of the home would need to be a "first-time home buyer" that is acquiring the new home for use as their primary place of residence. That individual would also need to be the first individual to occupy the home as a place of residence.
• The FTHB GST Rebate would generally be available if:
  • the agreement of purchase and sale for the home is entered into with the builder on or after May 27, 2025 and before 2031; and
  • construction of the home begins before 2031 and the home is substantially completed before 2036.

Middle Class Tax Cut

Issue

Through the Making Life More Affordable for Canadians Act, the government is proposing to reduce the first personal income tax rate from 15 per cent to 14 per cent, effective July 1, 2025.

Key points

• The federal government is proposing to reduce the lowest personal tax rate from 15 per cent to 14 per cent, effective July 1, 2025, which will put more money back into the pockets of hard-working Canadians. 
• Working Canadians could start seeing these tax savings on their pay cheques as of July 1 when withholding rates could be adjusted. 
• Individuals who benefit would receive tax relief of up to $420 in 2026 (the first full year where the rate would be 14 per cent), and two-income families would receive tax relief up to $840. 

Anticipated Questions and Answers

1. The Government announced that the lowest personal income tax rate is changing to 14% effective July 1, 2025. If so, why will the tax rate be 14.5% for the 2025 taxation year? What happens to employment income that has had tax withheld at 15% in the first half of the year?

Income is reported and tax is calculated on an annual basis. To reflect a one-percentage-point cut in the lowest tax rate coming into effect halfway through the year, the full-year tax rate for 2025 would be 14.5 per cent and the full-year rate for 2026 and future tax years would be 14 per cent.

This approach would make the proposed tax rate reduction simple for all Canadians.

The Canada Revenue Agency has updated its source deduction tables for the July to December 2025 period so that employers and pay administrators are able to reduce tax withholdings as of July 1. This means that, effective July 1, individuals with employment income and other income subject to source deductions could have tax withheld at 14 per cent. Otherwise, individuals will realize this tax relief when they file their 2025 tax returns in spring 2026. 

2. How much will the tax rate reduction cost?

This middle-class tax cut is expected to provide $27.2 billion in tax relief to Canadians over five years.

3. Who will benefit the most from this tax cut? Is this tax cut going to help Canadians struggling with a higher cost of living?

Nearly 22 million Canadians would benefit from tax relief of up to $420 per person in 2026, saving two-income families up to $840 a year.

The bulk of tax relief will go to individuals whose total taxable income is under $114,750 in 2025, with nearly half of the relief benefitting Canadians in the first bracket (taxable income $57,375 and below in 2025).

Background

On May 14, 2025, the government announced that it would be tabling legislation to cut personal income taxes for the middle class, effective July 1, 2025. The proposed tax cut would reduce the first tax rate, which applies to taxable income of $57,375 and below in 2025, from 15 per cent to 14 per cent.

Canada's personal income tax system has a progressive rate structure where tax rates increase with income. Marginal tax rates currently range from 15 per cent to 33 per cent and bracket thresholds are indexed to inflation so that they keep up with the cost of living. The rate applying to almost all non-refundable tax credits (e.g., Basic Personal Amount) is legislatively linked to the lowest personal income tax rate.

As income is reported and tax is calculated on an annual basis, to reflect a one-percentage-point cut in the lowest tax rate coming into effect halfway through the year, the full-year tax rate for 2025 would be 14.5 per cent and the full-year rate for 2026 and future tax years would be 14 per cent. The rate applied to most non-refundable tax credits would continue to be the same as the lowest personal income tax rate. 

With the tabling of the Notice of Ways and Means Motion, the Canada Revenue Agency has updated its source deduction tables for the July to December 2025 period so that employers and pay administrators are able to reduce tax withholdings as of July 1. This means that, effective July 1, individuals with employment income and other income subject to source deductions could have tax withheld at 14 per cent. Otherwise, individuals would realize this tax relief when they file their 2025 tax returns in spring 2026. 

Border Security

Issue

Investments in border security will respond to growing complexity of cross-border crime and pressures on our borders and immigration system.

Key points

• The government is committed to a strong and secure border through targeted investments across responsible organizations.
• In December 2024, the government announced a $1.3 billion Border Plan to detect and disrupt the illegal fentanyl trade, strengthen border control, introduce significant new tools for law enforcement, improve operational coordination, expand information sharing, and minimize unnecessary border volumes.
• We continue to work across the government, and with our international partners, to implement actions from Canada's Border Plan and the recent Speech from the Throne.

Anticipated Questions and Answers

1. How much funding was allocated to each department?

Canada's Border Plan includes $667.5M for the Royal Canadian Mounted Police, $355.4M for the Canada Border Services Agency, $180M over 6 years for the Communications Security Establishment, $77.7M for Health Canada, and $20M over five years for Public Safety Canada.

2. What results have been generated to date?

The government has established a Canada-US Strike Force to cooperatively combat organized crime, fentanyl, and money laundering, which complements existing joint enforcement activities and information sharing. A Fentanyl Czar has been appointed, accompanied by a new intelligence directive on organized crime and fentanyl. On immigration, the government closed the "flagpoling" loophole, which allowed temporary residents to leave Canada and immediately return to get immigration services. This frees up Canadian and U.S. border officers to focus on higher risk activity. Additionally, illegal border crossings from Canada to the U.S. have decreased dramatically, with a 99% reduction in southbound apprehensions as of March 2025 compared to peak 2024 levels.

Background

The Border Plan included funding for Public Safety Canada, the Canada Border Services Agency (CBSA), the Communications Security Establishment (CSE), and the Royal Canadian Mounted Police (RCMP). Among other actions, it confirmed measures to address smuggling of illegal goods, enhance operational responses, strengthen anti-money laundering and anti-terrorist financing, and reinvigorate international cooperation with the United States.

CBSA combats the cross-border movement of firearms, illicit drugs, and chemical precursors using various types of technology to detect and examine illicit goods. This includes non-intrusive imaging tools (Small-Scale Imaging and Large-Scale Imaging), x-ray technology, radiation detection portals, specialized examination vehicles, and handheld x-ray devices. The Agency also works closely with RCMP and Five Eyes allies (the United States, United Kingdom, Australia, and New Zealand) to share intelligence and information to identify and interdict cross-border shipments. In the 2024-25 fiscal year, CBSA made over 49,000 seizures, including over 17,000 kg of cannabis, 3,400 kg of cocaine/crack, 6 kg of fentanyl, 69 kg of heroin, and 447 kg of other opioids. In 2024, CBSA seized 2,277 stolen vehicles, an increase from 1,806 intercepted in 2023.

The RCMP is responsible for securing Canada's borders between the ports of entry. As Canada's national police force, the RCMP also conducts investigations and works with domestic and international partners to combat inbound and outbound criminal threats.  

The RCMP's Border Integrity program has a strategy in place to monitor, assess and respond to threats at our border, and is working with partners to deploy resources where they are needed most, based on three priorities: 

• Intelligence: gathering and synthesizing information from a variety of human and technological sources.  
• Integration: enhancing collaboration with other RCMP programs to address sophisticated, borderless crime.  
• Partnerships: strengthening and leveraging partnerships to ensure the RCMP has a complete threat picture at the border, informing an appropriate response.  

Public Safety coordinates across all federal departments and agencies responsible for national security and the safety of Canadians. 

Canada-U.S. Tariffs and Trade

Issue

In response to unjustified U.S. tariffs, the government has imposed counter-tariffs on $95 billion of imports from the U.S. The government has committed to ensuring that every dollar of revenue generated through counter-tariffs will be used to support impacted workers and businesses.

Key points

• Our government will always defend the interests of Canada and Canadians. That is why, in response to the unjustified U.S. tariffs, our government acted quickly by imposing countermeasures on U.S. goods in a strong but measured response that minimizes impacts on Canada as much as possible.
• As of May 30, 2025, $1.7 billion in surtax revenue related to U.S. countermeasures has been assessed, net of remission and other tariff relief provided.
• We are dedicating all revenue from our counter-tariffs to supporting impacted Canadian workers and businesses. To date, we have expanded existing programs and introduced new measures to support impacted workers and businesses, avoid layoffs and help businesses diversify their markets.
• This includes the Employment Insurance Work Sharing Program, broadened access to liquidity through financial crowns and the Large Employer Tariff Loan facility, and deferring corporate income tax payments and GST/HST remittances.
• Our government is also moving ahead with reciprocal procurement policies to limit federal procurements to Canadians and trading partners that provide reciprocal access to Canada through trade agreements. We will continue to explore additional ways to maximize the use of Canadian steel and aluminum in government-funded projects, including in coordination with Canadian provinces and territories.
• Our government continues to work to build a new economic and security relationship with the United States – based on respect, built on common interests, and to the benefit of both nations.
• At the same time, our government is working to build a more productive, competitive, and resilient economy. This includes removing barriers to interprovincial trade and labour mobility, streamlining regulations, and making long-term investments to strengthen Canada's economic foundation.

Anticipated Questions and Answers

1. Why is the Canadian government unilaterally removing its counter-tariffs?

• To ensure Canada's tariff response was calibrated to respond to the U.S. while limiting economic harm to Canada, the government announced targeted and temporary six-month relief to provide Canadian companies more time to adjust their supply chains and reduce their reliance on U.S. suppliers.
• This temporary relief applies only to certain listed entities that support public health, public safety, and national security, as well as goods used in manufacturing, processing, or food and beverage packaging.
• Goods used for all other purposes —such as retail consumer products and steel used in construction or infrastructure—all face tariffs without reprieve. The scope of products covered by Canada's counter-tariffs remains unchanged.
• Overall, Canada's tariff response has been crafted to help and protect Canadian businesses impacted by U.S. tariffs maintaining the resilience and competitiveness of the Canadian economy.

2. How is the government's engagement with the Trump administration progressing?

• The Prime Minister's meeting with President Trump on May 7 has laid the foundations for negotiations towards a new economic and security relationship.
• The government will continue to ensure that any deal with the U.S. is in the interest of Canada.

3. How have tariffs impacted the economy?

• Higher U.S. tariffs, escalating global trade tensions, and continued uncertainty injected by shifting U.S. policies are weighing on the Canadian economy.
• *Bullet redacted*
• U.S. tariffs risk weakening North American supply chains and raising costs for consumers and businesses on both sides of the border.
• In response, the government remains focused on what matters most to Canadians—creating good, well-paying jobs, growing the economy, and building stronger trade ties with trusted partners to build long-term resilience and security.

Background

• The U.S. has imposed three sets of tariffs on Canada:
  • 25 per cent tariff on the non-U.S. components of autos. Auto parts from Canada are currently exempt from a 25 per cent U.S. tariff.
  • 50 per cent on steel and aluminum and derivative products (increased from 25 per cent on June 4, 2025); and
  • 25 per cent on all goods (except 10 per cent on energy resources, including critical minerals, and potash) that do not meet CUSMA rules of origin. On May 28, the U.S. Court of International Trade struck down these tariffs having found that they were imposed unlawfully. The specific status of these tariffs remains uncertain, pending outcomes of appeals by the Trump Administration.
• In response, Canada has imposed counter-tariffs affecting approximately $95 billion of annual imports from the U.S., including steel, aluminum, and other products. Canada's response on autos mirror the U.S. auto tariffs in the form of a 25 per cent to non-CUSMA compliant vehicles from the U.S., as well as the non-Canadian and non-Mexican content of CUSMA-compliant vehicles from the U.S.
• The U.S. is undertaking additional Section 232 investigations on the following strategic sectors, which could result in additional tariffs: (1) lumber, (2) copper, (3) semi-conductors, (4) pharmaceuticals, (5) medium and heavy duty trucks, (6) processed critical minerals, (7) commercial aircrafts and jet engines and related parts. The government continues to monitor these investigations and prepare advice on potential responses.
• The government announced on April 15 a temporary 6-month tariff relief (remission), until October 15, 2025, for goods imported from the U.S. by certain listed entities that support public health, public safety, and national security, as well as goods used in manufacturing, processing, or food and beverage packaging. Remission is provided on a time-limited basis to provide businesses and entities with additional time to adjust their supply chains and prioritize domestic sources of supply if available.
• On April 15, the government announced a performance-based remission framework that allows automakers that continue to manufacture vehicles in Canada to import a certain number of U.S.-assembled, CUSMA-compliant vehicles into Canada, free of the countermeasure tariffs. The remission granted to these companies is contingent on these automakers continuing to produce vehicles in Canada and on completing planned investments. The number of tariff-free vehicles a company is permitted to import will be reduced if there are reductions in Canadian production or investment. The framework will remain in force for a period of one year starting April 9, 2025.
• To help Canadian workers facing job losses, the government has introduced temporary flexibilities to the Employment Insurance (EI) Work-Sharing Program, which provides EI benefits to eligible employees who agree to work reduced hours due to a decrease in business activity beyond their employer's control. This helps employers avoid layoffs while supplementing employees' reduced income with EI benefits.
• Additional EI measures have also been introduced to strengthen supports for workers who lose their jobs. These include:
  • Waiving the one-week waiting period so that workers can receive benefits for the first week of unemployment. This measure expires on October 11, 2025.
  • Suspending the rules around monies on separation (e.g., severance, vacation) to allow claimants to receive EI benefits sooner. This measure expires on October 11, 2025.
  • Adjusting the unemployment rates in EI regions to make it easier for workers to qualify for EI and increase the duration of benefits. This measure expires on July 12, 2025.
• The government has acted to help Canadian business facing trade disruptions from U.S. tariffs. This includes:
  • $5 billion deployed by Export Development Canada (EDC) through the Trade Impact Program;
  • $500 million in favourably priced loans from Business Development Bank of Canada (BDC);
  • $1 billion in new financing from Farm Credit Canada (FCC);
  • $10 billion in credit availability through the Large Enterprise Tariff Loan (LETL) facility;
  • For agricultural producers, additional support through the Advance Payments Program and AgriStability; and
  • A deferral of corporate income tax payments and GST/HST remittances from April 2 to June 30, 2025, which is estimated to provide up to $40 billion in liquidity to businesses.
• In response to the doubling of U.S. tariffs on steel and aluminum, the government intends to launch two government-industry steel and aluminum trade monitoring committees to address trade diversion that could harm Canadian workers and businesses. As well, the government will move forward with reciprocal procurement policies to limit federal procurements to Canadian and trading partners that provide reciprocal access to Canada through trade agreements, and to work consider additional ways to maximize the use of Canadian steel and aluminum in government-funded projects.
• As of May 30, 2025, $1.7 billion in surtax revenue related to U.S. countermeasures has been assessed, net of remission and other tariff relief provided.
• On May 30, the Department of Finance released the Fiscal Monitor for March 2025, which showed a significant increase in total customs duty revenue collected (an increase of 114 per cent in March 2025 $1.044 billion compared to $427 million in March 2024). Statistics Canada also released quarterly revenue, which reflected an increase in total customs duty revenue collected in the first quarter of 2025. These increases largely reflect the imposition of tariffs on the U.S.

U.S. Retaliatory Taxation of Canadian Investors

Issue

Legislation is under consideration by the U.S. Congress that could impose retaliatory taxation on Canadians and other foreigners that hold investments in the United States.

Key points

• The Government is monitoring the progression of the U.S. bill in Congress and assessing the potential implications of the proposed U.S. retaliatory tax provision.
• We remain engaged in discussions with the U.S. and other countries to find a workable solution on international taxation that achieves our common objectives.

Anticipated Questions and Answers

1. Will the Government repeal the Digital Services Tax?

The DST is in force and applies to large businesses – both Canadian and foreign – that earn revenue from providing certain digital services in Canada. We are continuing to engage on a multilateral solution that would replace the DSTs of Canada and other participating countries. Canada's DST is in place to ensure that Canada's interests are protected in the interim.

Background

Overview of proposed U.S. retaliatory measures

On May 22, 2025, the U.S. House of Representatives passed the budget reconciliation bill "One Big Beautiful Bill Act" (H.R.1), which would introduce a new provision to the U.S. Internal Revenue Code (section 899) that would apply retaliatory taxation on countries that impose "extraterritorial or discriminatory" taxes against U.S. persons. The bill has not yet passed the Senate and must also be signed by the President.

Countries would be at risk of U.S. retaliation under this new provision if they impose digital services taxes (DSTs), diverted profits taxes, the secondary taxing rule of the OECD Pillar Two global minimum tax (known as the "undertaxed profits rule" or UTPR), and any other extraterritorial tax or discriminatory tax as the U.S. Treasury Secretary would provide.

Under the proposed provision, residents of the countries subject to U.S. retaliation – including individuals, corporations, governments and private foundations, as well as the non-U.S. entities they own – would pay higher rates of U.S. tax on income they earn from U.S. sources – up to 20 percentage points higher than the otherwise applicable statutory rates. U.S. subsidiaries of residents of affected countries would also become subject to a U.S. anti-base erosion rule, under more stringent conditions than normally apply.

Potential application to Canada

As proposed, U.S. retaliation would apply to Canadian investors by virtue of Canada having a DST. Enactment of Canada's proposed UTPR would also attract retaliation. Depending on when the U.S. provision is enacted, retaliation could apply as of January 1, 2026 (potentially sooner for certain aspects of the proposed provision).

Other countries at risk of U.S. retaliation

Countries that impose DSTs include Austria, France, Italy, Spain, Türkiye, the UK, and five developing countries. A number of other countries have measures to tax digital businesses that may also attract U.S. retaliation.

Countries that have implemented the Pillar Two UTPR include EU countries, Australia, Japan, New Zealand, Norway, South Korea and the UK (among others).

Overall, countries at risk of U.S. retaliation account for some four-fifths of foreign direct investment and close to two-thirds of foreign portfolio investment into the United States.

Canada's Digital Services Tax

While Canada has long favored a multilateral approach to taxing digital companies, the Government moved forward with implementing the DST given repeated delays in the multilateral negotiations.

Canada's DST came into force on June 28, 2024 and applies as of 2024, with the first year of application covering in-scope revenues earned since January 1, 2022 (the originally-announced start date). The first DST returns and payments are due by June 30, 2025.

Canada remains engaged with other countries in finding appropriate solutions that maintain the stability, cohesiveness and effectiveness of the international tax system.

Canada's Global Minimum Tax Act and Proposed UTPR

Canada enacted the Global Minimum Tax Act in June 2024. This legislation implements the primary rule (the Income Inclusion Rule) of the Pillar Two global minimum tax as well as a domestic minimum top-up tax, both applicable from December 31, 2023. Draft legislation to implement the UTPR backstop rule was released for public consultation in August 2024, with proposed application to corporate fiscal years that begin on or after December 31, 2024.

The UTPR is a key component of the Pillar Two global minimum tax framework, designed to ensure that large multinationals pay a minimum effective tax rate of 15 per cent in every jurisdiction where they operate and prevent countries from gaining a competitive advantage by not implementing Pillar Two.

Canadian Economy

Issue

The Canadian economy is resilient, with the recent National Accounts showing that real GDP grew at a pace of 2.2 per cent in the first quarter. However, some economic forecasts suggest that Canada could be heading towards a recession this year.

Key points

• Canada's economy entered 2025 in solid shape and continues to show resilience.
• The last GDP report showed over 2 per cent growth in the first quarter of 2025 – matching the pace in the fourth quarter of 2024.
• That beat market expectations (1.7 per cent, Bloomberg median), the Bank of Canada's latest forecast (1.8 per cent), and projections in the 2024 Fall Economic Statement (1.7 per cent).
• Among G7 countries, Canada recorded the second-strongest quarterly growth rate and the strongest year-over-year performance in the first quarter, proof our fundamentals remain strong.
• But serious headwinds are building: new U.S. tariffs and exceptional global uncertainty are weighing on our outlook. Tariff rates remain high, and more actions are being threatened.
• Domestic demand has stalled. The labour market is softening. Growth is slowing, and earlier front-loading is now giving way to a sharp drop in trade. Canadians are rightly concerned—and we take these risks seriously.
• But it's not just about the challenges—it's about how we respond.
• We're focused on supporting workers and businesses directly hit by U.S. tariffs, and on creating the conditions for investment and long-term growth.
• Our goal is clear: to build the strongest, most resilient economy in the G7—one that delivers good jobs and lasting opportunity for Canadians. And that starts with creating one Canadian economy out of thirteen.

Anticipated Questions and Answers

1. How do you intend to make a stronger Canadian economy? What is the government doing to make Canada a more attractive place for investment?

• Our long-term prosperity depends on fostering growth and opportunity in all parts of the country.
• Achieving this vision requires building a truly integrated Canadian economy – creating one Canadian economy out of thirteen.
• Internal trade barriers to trade and labour mobility remain a significant economic drag, costing Canada as much as $200 billion each year.
• This is why the government has introduced new legislation to remove all remaining federal barriers to internal trade and labour mobility.
• This new legislation will make it easier to do business across Canada by removing regulatory duplication and cutting federal red tape. It will also reduce costs or delays for Canadian businesses who follow comparable provincial and territorial rules.
• The government is also working closely with provinces, territories, and Indigenous Peoples to identify and advance major nation-building projects – projects that boost productivity, reinforce energy security, and enhance Canada's competitiveness on the global stage, creating high-paying jobs for generations to come.
• By breaking down internal barriers and investing strategically in our shared future, we will make Canada a more attractive destination for investment, innovation, and opportunity.

2. What are you doing to support Canadians during this uncertain period?

• We have cut taxes for the middle-class and ensured a suite of federal supports is ready to assist workers and businesses affected by U.S. tariffs.
• We are strengthening ties with other partners so Canadian businesses can access new markets.
• We are also working actively to remove internal barriers to build one Canadian economy out of thirteen.

3. Canada's labour productivity has declined in nine of the last 10 quarters and has been stagnant since before the pandemic. What specific measures do you have to address this?

• The recent decline in labour productivity has been partly driven by surging immigration, a trend expected to ease as immigration flows stabilize.
• Still, Canada faces long-standing productivity challenges with its labour productivity growth trailing other advanced economies over the past few decades.
• The government is addressing Canada's productivity challenges by maintaining a competitive corporate tax environment—with the most competitive marginal effective tax rate on new investment in the G7; supporting investment in clean technology and other advanced technology such as Artificial Intelligence; and reducing internal trade barriers.
• We have also strengthened Canada's energy leadership by supporting investment in clean electricity and critical minerals while completing the Trans Mountain Pipeline expansion to boost Canada's export capacity for crude oil.
• The government is also taking steps to get major projects built faster to enhance investor confidence and continue to support investments in Canada's economic infrastructure.

4. Housing remains unattainable for young Canadians, things cost more, and counter tariffs are just raising the price of everyday items. How do you plan to deal with this unaffordability crisis?

• An economy is only truly strong when it works for everyone.
• Many Canadians are still struggling to get ahead, and the government is responding.
• We will cut the GST for first-time homebuyers on homes up to $1 million—saving Canadians up to $50,000.
• In high-cost cities, we will also reduce the GST on homes priced between $1 million and $1.5 million.
• These measures will help more young Canadians and families achieve homeownership. We are also making mortgage payments more affordable and accelerating home construction in a sustainable way.
• At the same time, we are protecting programs that are already saving families thousands of dollars every year, including childcare and pharmacare.
• The recently expanded Canadian Dental Care Plan now covers about eight million people, saving the average person over $800 annually.

Background

The Canadian economy ended 2024 on solid footing. Real GDP grew by 2.1 per cent in the fourth quarter and 1.6 per cent for the year as a whole, supported by lower interest rates. The labour market was recovering, with stronger demand for workers. Inflation stayed near the Bank of Canada's 2 per cent target since August. As a result, the Bank cut its policy rate by 225 basis points between June 2024 and March 2025, bringing it down to 2.75 per cent.

However, the Canadian economy faces growing impacts from U.S. trade policies and the associated uncertainty. Targeted tariffs on steel, aluminum, autos, and possibly pharmaceuticals, microchips, and copper will reduce exports and slow economic growth. And spillovers from weaker global demand, trade disruptions, lower oil prices, and falling confidence will weigh on the Canadian economy.

The Canadian economy grew at a still solid 2.2 per cent pace in the first quarter of 2025. This growth was driven by higher export activity and a temporary buildup of inventories in anticipation of U.S. tariffs. However, heightened trade uncertainty led to a significant slowdown of domestic demand.

Recent data also show weak labour demand. Employment growth has stalled, job postings have slowed, and the unemployment rate rose to 7.0 per cent in May. Surveys reveal declining business and consumer confidence. Businesses are cutting back on investment and hiring. *Sentences redacted*. Trade with the U.S. faltered in April. Merchandise export volumes fell sharply in April (-8.3 per cent month-over-month), pulling the six-month moving average down for the first time since November and reversing the strength in exports that boosted first quarter growth. Imports from the U.S. also fell sharply. Trade with the rest of the world seems to be holding up.

Going forward, risks to Canada's economic outlook are closely tied to trade policy developments.

Canadian Labour Market

Issue

U.S. tariffs and heightened trade uncertainty are weighing on Canada's labour market. Most private sector economists now believe a downturn is underway. TD reported that Canada is nearing a two-quarter recession and that they expect job losses of 100,000 jobs this fall and the unemployment to rise to 7.2 per cent.

Key points

• Unjustified U.S. tariffs and trade uncertainty are already weighing on the Canadian economy and the labour market.
• Since January, employment has declined by about 15,000 and the unemployment rate has risen to 7.0 per cent. That said, the Canadian economy has still added 280,000 jobs over the past year.
• The labour market is expected to continue to weaken amid the ongoing trade conflict. As suggested by the most recent data, job losses are expected to be more pronounced in sectors with the most exposure to trade with the U.S. That said, low business confidence is also limiting hiring across many sectors.
• There is no doubt that we are operating in a context of heightened uncertainty. The risk to workers is real—and the Government of Canada is responding.
• The government has a clear, comprehensive plan to defend Canadians jobs and businesses in the face of unjustified U.S. measures.
• A robust suite of federal supports is available to assist businesses and workers directly impacted by U.S. tariffs.
• The government remains firmly committed to building the strongest economy in the G7.

Background

Prior to the U.S. tariff announcements, Canada's labour market had begun to recover from the soft conditions that prevailed through 2023 and most of 2024. From November to January, the Canadian economy added 211,000 jobs, and the unemployment rate fell from 6.9 per cent to 6.6 per cent.

However, trade policy uncertainty and U.S. tariffs are now weighing on economic growth and the labour market. Hiring intentions have fallen. Since January, employment has declined by 15,300 jobs, including the loss of 54,700 jobs in the manufacturing sector. Elevated uncertainty is also dampening hiring across a broad range of industries.

Slower employment growth relative to robust labour supply growth has led to an increase in the unemployment rate. In May 2025, the unemployment rate reached 7.0 per cent—its highest level since September 2016 excluding pandemic-related spikes.

To date, weaker labour market performance has largely been driven by subdued hiring relative to labour supply growth rather than layoffs. While hiring has been soft since early 2023, it has weakened further amid tariffs and heightened uncertainty. The slowdown in hiring has made it particularly difficult for newcomers and youth to find employment, with the youth unemployment rate reaching 14.2 per cent in May. It has also contributed to rising long-term unemployment: 22.6 per cent of unemployed individuals had been out of work for 27 weeks or more in May—4.5 percentage points higher than a year earlier.

Overall, tariffs and trade uncertainty are creating difficult labour market conditions for many workers. Further softening is expected in the coming months, but the outlook remains uncertain and will depend critically on the evolving U.S. tariff situation.

Capital Budgeting

Issue

The government is adopting a new approach to budgeting which separates spending that stimulates public and private sector capital formation from day-to-day operating spending, to increase productivity and economic growth.

Key points

• Capital budgeting is fundamentally about investing more in productive assets, to boost Canada's long-term economic potential. To achieve this, an important step is to better categorize government expenditures that support capital formation.
• The Department of Finance is working to develop a framework for this approach, focusing on assets owned by the federal government as well as transfers to other governments and private and public sector organizations that are intended to support capital formation.
• The government has committed to balancing its day-to-day operating spending by 2028-29. Over the coming months, spending will be reviewed across government operations and programs to improve public service productivity, service delivery and program effectiveness.
• Further details on both capital budgeting and operating savings will be provided this fall in Budget 2025.

Anticipated Questions and Answers

1. How will capital and operating spending be reported on?

• Further details on the reporting of capital and day-to-day "operating" spending will be provided this fall in Budget 2025.
• This new framework will not change how expenditures are reported on in the Public Accounts of Canada.

2. How will the government balance "day-to-day spending"?

• The government is committed to undertaking a comprehensive review of government spending in order to increase federal government productivity.
• To balance day-to-day spending, the government will take steps that include eliminating wasteful spending, reducing duplication, and leveraging technology to improve public service productivity.

Combatting Financial Crimes (Anti-Money Laundering Measures)

Issue

The 2025-26 Main Estimates includes $619,809 in funding for the design and development of the Canada Financial Crimes Agency, which was announced in Budget 2024 as part of Canada's efforts to improve financial crimes enforcement in Canada.

Key points

• The government is committed to a comprehensive and coordinated approach to financial crimes, especially combating money laundering and terrorist financing, to promote the integrity of the financial system and the safety and security of Canadians.
• The government has brought forward legislative changes in every Budget since 2019, and over the past six years, Canada has invested close to $379 million to update and strengthen Canada's Anti-Money Laundering/Anti-Terrorist Financing Regime.
• Budget 2024 allocated $1.7 million over two years, starting in 2024-25, to the Department of Finance to continue to consider options for a Canada Financial Crimes Agency, to strengthen Canada's enforcement of financial crime laws.
• The government recently introduced the Strong Borders Act, which will strengthen our laws and keep Canadians safe by ensuring law enforcement has the right tools to keep our borders secure, combat transnational organized crime, stop the flow of illegal fentanyl, and crack down on money laundering. It will bolster our response to increasingly sophisticated criminal networks, while protecting Canadians' privacy and Charter rights.

Anticipated Questions and Answers

1. Will the government seek to bring forward measures announced in the 2024 Fall Economic Statement to strengthen Canada's Anti-Money Laundering/Anti-Terrorist Financing Framework?

The 2024 Fall Economic Statement announced a package of measures to improve compliance with Anti-Money Laundering/Anti-Terrorist Financing requirements, including increasing administrative penalties by a factor of 40 times. The government has brought forward these measures as part of its recently introduced Bill C-2, the Strong Borders Act, to strengthen Canada's borders.

2. Is the government still planning to pursue a Canada Financial Crimes Agency, originally announced in Budget 2022?

As announced in Budget 2024, the Department of Finance received $1.7 million over two years to work on options for designing a Canada Financial Crimes Agency. The department will continue to undertake policy analysis to improving financial crimes enforcement in Canada.

3. What is the government doing to respond to the United States' claim that money laundering is among the drivers of the fentanyl crisis which has put tariffs on Canadian goods?

The government recognizes the importance of tackling money laundering, which is used to enable criminals to use their profits to continue to commit crimes such as fentanyl trafficking. The department has undertaken several initiatives to bolster the government's fight against fentanyl, which includes $1.3 billion to secure the border and Bill C-2, the Strong Borders Act, which will crack down on money laundering as part of efforts to combat transnational organized crime which facilitates the flow of illegal fentanyl. In February 2025, the Department stood up the Integrated Money Laundering Intelligence Partnership (IMLIP) between law enforcement and Canada's big banks to improve information sharing and identify money laundering. In March 2025, the government issued a mandate letter to the Financial Transactions and Reports Analysis Centre (FINTRAC), directing FINTRAC to mobilize resources to respond to the illicit financing that enables the fentanyl trade. In the recent G7 Finance Ministers meeting, Ministers agreed to a joint communiqué which included a Financial Crimes Call to Action.

Background

Canada's Anti-Money Laundering and Anti-Terrorist Financing Regime

• Canada's AML/ATF framework consists of a robust set of legislative and regulatory provisions which combats financial crime while respecting division of powers, the Charter, and the privacy rights of Canadians. The regime includes 13 federal departments and agencies coordinated by the Department of Finance. Provincial and municipal law enforcement, as well as provincial and territorial regulators, are also involved.

Canada Financial Crimes Agency

• In Budget 2022, the previous government announced its intention to create a Canada Financial Crimes Agency (CFCA) as Canada's lead enforcement agency in the financial crimes space. Public Safety was allocated $2 million to develop and design the new agency. Budget 2024 reaffirmed the government's commitment to establishing the CFCA and announced $1.7 million over two years for the Department of Finance to finalize the design and legal framework for the new agency.
• The Department of Finance has used its funding to onboard resources to finalize the design and conceptualization of the CFCA, including personnel with policy expertise in law enforcement, national security, and financial crime, building on work undertaken by Public Safety Canada. Finance has also used some of the funding to support targeted engagement and consultations with provincial and territorial partners, and has consulted top external AML/ATF experts on this work.

Recent Actions

AML/ATF Measures in the Strong Borders Act (Bill C-2)

• Disrupting Illicit Financing is one of the three themes of the Strong Borders Act, tabled on June 3. Bill C-2 includes a comprehensive set of amendments to strengthen anti-money laundering supervision, compliance, and enforcement, enhance information sharing, and address some of the most prevalent types of money laundering. A list of all measures in C-2 is provided in the Annex.
• Most of the measures contained in the Bill were announced in the 2024 Fall Economic Statement. These include amendments to: introduce new compliance requirements; strengthen civil and criminal penalties; require reporting entities that are not already registered to enroll with FINTRAC; enable FINTRAC Disclosures to Elections Canada; and make FINTRAC a member of the Financial Institutions Supervisory Committee.
• The Bill also proposes new measures to: address some of the most prevalent types of money laundering, including through new restrictions on large cash transactions and third-party cash deposits; and clarify public to private information sharing provisions to help better detect and deter money laundering and support the recently created IMLIP between banks and law enforcement.

Integrated Money Laundering Intelligence Partnership (IMLIP)

• The IMLIP was established in February 2025 to support the permissible sharing of money laundering and organized crime intelligence between law enforcement and Canada's big banks. Canada's Commissioner of Canada's Fight Against Fentanyl launched the inaugural meeting.
• The IMLIP will bolster Canada's response to organized crime and money laundering schemes, including related to fentanyl trafficking. The IMLIP will also help facilitate strong working relationships between law enforcement and the financial services sector, to establish a greater understanding of money laundering threats facing Canada. Membership includes RCMP Federal Policing program officials and the Chief Anti-Money Laundering Officers of major Canadian financial institutions.

G7 Call to Action

• The communiqué from the May 2025 G7 Finance Ministers meeting included a Financial Crime Call to Action, committing the G7 to strengthen AML/ATF frameworks and enhance cooperation to fight financial crime.

Private to Private Information Sharing

• In March 2025, the government implemented a new framework to enable private-to-private information sharing to identify suspicious trends and transactions suggestive of money laundering and other illicit activity.

Annex: Financial crime measures in Strong Borders Act

• Part 10 of Bill C-2 would amend the PCMLTFA and its regulations to strengthen anti-money laundering supervision, compliance, and enforcement and enhance information sharing by:
  • Strengthening the AMP framework by:
    • increasing AMPs by a factor of 40 times;
    • establishing a new aggregate limit for all AMPs issued at a single time;
    • addressing unpaid AMPs; and
    • establishing safeguards for small businesses so they are not disproportionately penalized.
  • Enhancing the compliance of reporting entities by:
    • strengthening compliance program requirements and their enforcement;
    • requiring a reporting entity to enter into a compliance agreement following issuance of an AMP; and
    • introducing a public compliance order if the compliance agreement is not adhered to; failure to comply would result in an additional AMP.
  • Punishing serious criminal non-compliance by:
    • increasing limits for all criminal fines by 10 times and all undefined prison terms to up to 1 year; and
    • introducing a new offence for the provision of false information to FINTRAC. 
  • Strengthening FINTRAC's supervisory program by requiring reporting entities, not already registered, to enroll with FINTRAC; and
  • Supporting the detection and deterrence of illicit financing and foreign interference in Canadian elections by enabling FINTRAC disclosures to the Office of the Commission of Canada Elections.
• Part 11 of Bill C-2 would amend the PCMLTFA to address the most prevalent types of money laundering by:
  • prohibiting the acceptance of cash payments, deposits, or donations over $10,000, except by regulated deposit taking institutions; and
  • prohibiting deposits by individuals who are not the owner of the account (i.e., 'third party deposits').
• Part 12 of Bill C-2 would amend the PCMLTFA and the Office of the Superintendent of Financial Institutions Act to enhance supervisory collaboration and support high standards of regulatory compliance by:
  • Enabling FINTRAC to exchange supervisory information on federally regulated financial institutions with other members of the FISC; and
  • adding the Director of FINTRAC to FISC.
• Part 16 of Bill C-2 would amend the PCMLTFA, with related amendments to the Personal Information Protection and Electronic Documents Act, to clarify public to private information sharing provisions to help better detect and deter money laundering and support the recently created IMLIP between banks and law enforcement.
• The measures previously announced in the 2024 Fall Economic Statement, other than universal enrollment, and public to private information sharing would come into force on Royal Assent. The clarification regarding public to private information sharing would also come into force on Royal Assent. The coming into force date for universal enrollment and the new restrictions on large cash transactions and third- party deposits would be fixed by the Governor in Council, following consultations and finalization of implementing regulations

Debt Management Strategy

Issue

This note outlines the most recent developments regarding the government's borrowing activities for fiscal year 2025-26.

Key points

• Based on projections from the 2024 Fall Economic Statement, the borrowing program is expected to be close to $600 billion in 2025–26, the vast majority of which is to refinance maturing debt.
• Canada's debt program retains the flexibility to absorb additional funding needs through 2025-26.
• Projected borrowing remains well within the legislated limit of $2,126 billion under the Borrowing Authority Act, and the $733 billion annual borrowing limit set by the Governor-in-Council.

Anticipated Questions and Answers

1. Table 4 of the Main Estimates indicate an increase of $74 billion in cash needs for the year. Shouldn't this be added to the borrowing program.

The Main Estimates are based on projected cash needs and do not include the complete scope of the Government's fiscal framework. The government borrows to meet net cash needs of revenues less expenditures.

2. Will this borrowing impact Canada's AAA credit rating?

Canada remains among the top-rated countries in the G7. Credit
rating agencies have been assessing issuers in light of global macroeconomic and fiscal conditions, and we have an ongoing dialogue with our ratings agencies. All major credit rating agencies have affirmed Canada's rating over the last number of months.

The IMF's April 2025 World Economic Outlook noted it expects Canada's net general government debt-to-GDP ratio to remain by far the lowest among G7 countries.

3. When will the Debt Management Strategy be published?

The Financial Administration Act requires publication within 30 sitting days after the start of the fiscal year.

The department is preparing the Debt Management Strategy which will be tabled in due course.

If pressed on the deadline:

Currently, September 26 is the statutory deadline.

4. The borrowing pace for this quarter would lead to a higher level of borrowing than $600 billion. Why the discrepancy?

On March 21, 2025 the government announced that it would defer corporate income tax and GST/HST remittances between April 2 and June 30, 2025, freeing up to $40 billion of liquidity for corporations in the quarter.

The government increased T-Bill issuance to cash manage temporary deferment of incoming revenues.

5. Why are borrowing needs projected to be so high in 2025-26?

Refinancing needs represent approximately 80 per cent of borrowing needs.

Refinancing needs in this fiscal year are driven by 5-year bonds issued during the COVID-19 pandemic.

*Question and answer redacted*

7. There has been a lot of bond market turmoil internationally. How is Canada fairing?

Government securities auctions continue to function well, supporting overall strong and orderly financial markets.

8. Will the government issue a Transition Bond?

The Department of Finance is scoping out a potential path for transition bonds.

Projected Deficits

Issue

The government projected it would run a deficit of $48.3 billion in 2024-25, or 1.6 per cent of GDP. While the March 2025 Fiscal Monitor reported a lower budgetary deficit of $43.2 billion, these results are not final.

Key points

• The Fall Economic Statement 2024 projected a $48.3 billion deficit for 2024-25, or 1.6 per cent of GDP.
• The March 2025 fiscal monitor indicates that the government posted a budgetary deficit of $43.2 billion for the April to March period of the 2024-25 fiscal year.
• The final results for 2024-25 will be published in the 2025 Public Accounts of Canada and will include end-of-year adjustments like accruals of tax revenues and valuation adjustments for assets and liabilities.

Anticipated Questions and Answers

Is the final deficit for 2024-25 likely to be higher or lower than the results in the March Fiscal Monitor?

The impact of post-March tax accruals and valuation and other adjustments is uncertain. The final results for 2024-25 will be published in the fall.

In the past three years, the government recorded revenues of $14.8 billion (2023-24), $16.8 billion (2022-23), and $16.5 billion (2021-22), respectively in the post-March period. End-of-year adjustments have resulted in additional expenses of $25.7 billion, $10.8 billion, and $11.1 billion, respectively in each of the past three years, largely relating to the recording of contingent liabilities related to Indigenous claims.

As a result, the final budgetary deficit grew by $10.9 billion in 2023-24, while it improved by $6.0 billion in 2022-23 and $5.4 billion in 2021-22 in the post-March period.

G7 Fiscal Comparison

Issue

*Sentences redacted*. This raises concerns about long-term fiscal sustainability, especially as economic growth slows and spending pressures mount.

Key points

• The IMF expects Canada to maintain the smallest deficit-to-GDP ratio in the G7 throughout its forecast horizon.
• The IMF confirms Canada's net debt burden is still lower today than in any other G7 country prior to the pandemic.
  
• It also expects Canada's net debt ratio to remain by far the lowest among G7 countries and lower than some other AAA countries such as the Netherlands and Australia.
• With the lowest net debt-to-GDP ratio in the G7, Canada has the capacity to respond with confidence—supporting Canadians today while investing in a more resilient, competitive, and inclusive economy for the future.
• According to the IMF's April Fiscal Monitor Canada's general government deficit is projected to fall from 2.2% of GDP in 2024 to 1.9% of GDP in 2025. It is expected to decline further to 1.6% in 2026 and reach just 0.8% by 2030.
• Canada's net debt-to-GDP ratio is projected to edge up in 2025 (from 11.9% in 2024 to 12.5%)—as it will for every G7 countries but Japan. It is then expected to reach 14.2% by 2029, before resuming its decline in 2030.

Background

Canada's projected net debt-to-GDP ratio for 2024 is just 11.9 per cent, compared to the G7 average, excluding Canada, of 100.4 per cent. In fact, Canada's net debt burden is still lower today than in any other G7 country prior to the pandemic (Table 1). Canada is also expected to have had the smallest deficit in the G7 as a share of the economy this year—an advantage that Canada is expected to maintain over the next five years. That said, some AAA peers perform better.

Canada's fiscal situation also compares very well to a broader group of 30 other advanced economy peers, with deficit- and net debt-to-GDP ratios among the lowest (Charts 1 and 2). This represents a sharp contrast with the country's fiscal situation during the 1980s and early 1990s when the accumulation of relatively large deficits led to a rapid rise in Canada's net debt burden and a deteriorating fiscal advantage relative to many advanced economy peers.

In terms of gross debt, which does not account for Canada's large financial assets, it is expected to edge up to 112.5% of GDP in 2025 before declining throughout the rest of the forecast horizon and reach 104.1% of GDP by 2030, leaving it 13.9 percentage points above its pre-pandemic level (Table 2). Canada used to rank broadly in the middle of the G7 for gross debt and large pandemic-related support measures had pushed this debt ratio further up. However, Canada's gross debt-to-GDP ratio is now on a declining trend while increases in this ratio are projected for most other G7 countries going forward. Canada is expected to have the second lowest gross debt ratio among the G7 starting in 2029.

Impact of Changing Economic Conditions on Canada's Fiscal Projections

Issue

Economic assumptions form the basis for fiscal planning. Changes in the economic environment impact the projections for both revenues and expenses. Recent U.S. trade-restrictive measures and rising global trade tensions increase economic uncertainty, and the potential for fiscal volatility. Budget 2024 (table A1.14) includes a sensitivity analysis of the fiscal projections to various economic shocks.

Key points

• The Government's fiscal position can improve or deteriorate based on a multitude of economic factors such as changes in GDP inflation, real GDP and interest rates. For example:
  • A drop in GDP inflation will lower government tax revenues. This will be partially offset by the lower cost of statutory programs indexed to CPI inflation; however, the overall impact will be a deterioration in the budgetary balance.
  • A decrease in real GDP would also deteriorate the Government's fiscal position due to a weaker outlook for employment and the taxbase.
  • Public debt charges are estimated based on the current expectations for future changes in interest rates. Higher interest rates increase the estimated public debt charges on marketable debt which deteriorates the budgetary balance.

Anticipated Questions and Answers

1. Why is the government not tabling a budget this spring, considering its economic plan is built on outdated projections made before the trade war erupted?

• The government has committed to delivering a fall budget. Simply put, there's not much value in rushing to a budget within this narrow spring window. And other considerations must be weighed to deliver a comprehensive and detailed budget.
  • Substantially advancing our discussions with the Americans will provide greater clarity.
  • The upcoming NATO summit is a crucial event for Canada's security and has significant budgetary implications.
  • And one of our key priorities is looking for areas to reduce costs and enhance the productivity of the public service.
• We are launching all this work while preparing the budget. Defence spending, economic outcomes, and efficiency are all factors that will be captured.
• By taking these steps, we will have a much stronger, ambitious and effective budget in the fall.

Public Accounts 2024

Issue

The Public Accounts of Canada 2024 generated concerns including the variance in actual results from Budget 2024 projections and the timeliness of the release of the final 2023-24 results, being December 17, 2024.

Key points

• In 2023-24, the government posted a deficit of $61.9 billion, compared to a $40.0-billion deficit projected in the April 2024 federal budget.
• The variance from Budget 2024 is due mainly to higher-than-projected expenses determined and recorded after year-end. This includes provisions for contingent liabilities related to Indigenous claims, as well as revised allowances for receivables and loans, including COVID-19 benefit overpayments receivable, Canada Emergency Business Account loans, and Canada Student Loans.
• The growth in Indigenous claims expenses over amounts forecast reflects the government's continued emphasis on reconciliation and its commitment to redressing historical wrongs towards Indigenous Peoples. Anticipating and accounting for the costs of these claims can be challenging and unpredictable.
• The remaining variance from Budget 2024 is due mainly to revenues, which were $5.5 billion, or 1.2 per cent, lower than forecast. This reflects the softening of the economy from higher interest rates as the Bank of Canada returned inflation to 2 per cent.

Anticipated Questions and Answers

1. Why were so many Indigenous contingent liabilities determined following the end of the fiscal year?

The contingent liability balance increases when the government recognizes new liabilities, or when new information leads to revised estimates of the potential liability.

The government records a provision for contingent liabilities when the probability of a future payment is considered likely and the amount can be estimated.

Although many of the files involved were considered in the 2024 Budget projection, there were a number of legal and negotiating developments after March 31 that prompted additions and revisions as part of preparing the government's financial statements. Examples of developments that can prompt an assessment or re-assessment include:

• Filing of a new claim, certification of a class action claim by the court, or other key legal milestone
• The completion of a Legal Risk Analysis by Justice Canada
• New information regarding class size or other factors that influence the potential value of a claim
• A decision by the government to enter into negotiations to settle out of court.

2. What is the government's projection for contingent liabilities in 2024-25?

The March 2025 Fiscal Monitor, which captures financial reporting from April 1, 2024, to March 31, 2025, published a deficit of $43.4 billion. The subsequent event period extends from April until the tabling of the Public Accounts. During this time the government's year-end tax assessments and other accrual adjustments are determined. The final results for 2024-25 will be published in the Public Accounts of Canada 2025.

3. What is the status of the expert working group on contingent liabilities announced in the 2024 Fall Economic Statement?

The government is committed to addressing the challenges of cost uncertainty associated with contingent liabilities as well as providing transparency for Canadians. Work continues on next steps, such as engagement with relevant experts.

Background

Canada Infrastructure Bank

Issue

Payments to the Canada Infrastructure Bank (CIB) appear under the Department of Finance Canada in the Main Estimates.

Key points

• The Minister of Finance has the statutory authority to pay up to $35 billion to the CIB out of the Consolidated Revenue Fund under section 23 of the Canada Infrastructure Bank Act.
• Payments to the CIB are for approved activities set out in its corporate plan, including investments in infrastructure projects and operations. As of March 2025, the CIB had invested $15.8 billion in 94 infrastructure projects across Canada.
• Payments to the CIB for 2025-26 are currently estimated at $3.480 billion, which represents the CIB's total capital and operating budget as per its current approved 2024-25 to 2028-29 Corporate Plan. There is expected to be minimal fiscal impact associated with this payment given returns earned on investments. 

Anticipated Questions and Answers

1. Provide detail on what the CIB intends to use the $3.5 billion for.

• The CIB invests in infrastructure projects, making a binding commitment at financial close and delivering the cash funding over time as project milestones are met.
• The 2025-26 Main Estimates for the CIB are based on the CIB's total capital and operating budget per its current approved 2024-25 to 2028-29 Corporate Plan. The capital trajectory anticipates approximately $3 billion to $5 billion in financial closes each year, while recognizing the potential for the timing of large and complex projects to vary.
• The CIB's approved capital and operating budgets represent a best estimate of cash required based on its projected investment pipeline and operations. The investing pace will vary by project and may change over time. As most projects are large and take time to construct, variances may occur between years, driving differences in actual expenditures versus budget.

2. What are the operating costs of the Canada Infrastructure Bank, including compensation?

• Like other Crown corporations, the CIB incurs operating expenses in carrying out its mandate. These expenses are overseen by the CIB's independent Board of Directors, which ensures that spending aligns with the Bank's strategic objectives and delivers value for money.
• In 2023-24, the CIB's operating expenses were $55.3 million, representing just 0.4 per cent of its $13 billion in committed capital. This provides good value for taxpayers and reflects strong operational efficiency relative to the scale and complexity of the CIB's investment activities.
• The CIB's compensation framework aligns with best practices of both the public and private sectors across Canada, helping the CIB attract and retain the specialized talent required to structure complex infrastructure deals. As with all federal organizations, the CIB is subject to the Privacy Act and the Access to Information Act. As such, personal information, including individual compensation, is protected under federal law.

Background

• The CIB is a Crown corporation with a mandate to invest, and to seek to attract private and institutional investment, in revenue-generating infrastructure projects that are in the public interest. To support its mandate, the CIB has a $35 billion statutory, cash funding envelope, and its net fiscal expense must not exceed $15 billion on an accrual basis. The CIB invests across five priority areas set by the government: Clean Power (at least $10 billion), Green Infrastructure (at least $10 billion), Trade and Transportation (at least $5 billion), Public Transit (at least $5 billion) and Broadband (at least $3 billion).
• As of March 2025, the CIB had made $15.8 billion in investment commitments.
• The Financial Administration Act (the FAA) and the Canada Infrastructure Bank Act (the CIB Act) establish the legal framework for the CIB. Under the CIB Act, the CIB must annually submit a corporate plan as well as its five-year capital and operating budgets to the Minister of Housing, Infrastructure and Communities, who may, with the Minister of Finance's concurrence, recommend the corporate plan for Governor in Council and Treasury Board approval.
• Pursuant to section 23 of the CIB Act, the Minister of Finance has statutory authority to pay up to $35 billion to the CIB out of the Consolidated Revenue Fund (CRF) for its activities. The Department of Finance reviews such requests to ensure that they are consistent with the CIB's latest approved corporate plan, including the five-year capital and operating budgets set out therein.
• The 2025-26 Main Estimates for the CIB are based on the CIB's total capital and operating budget for 2025-26 per its current approved 2024-25 to 2028-29 Corporate Plan.

*Section redacted*

Clean Economy Investment Tax Credits

Issue

As part of Canada's plan to build a clean economy, the federal government has announced six refundable investment tax credits (ITCs) aimed at spurring the transition to a low-carbon economy.

Key points

• The government has implemented four of the six major economic investment tax credits, which can be claimed with the Canada Revenue Agency. These include the:
  • Carbon Capture, Utilization and Storage investment tax credit, available as of January 1, 2022;
  • Clean Technology investment tax credit, available as of March 28, 2023;
  • Clean Hydrogen investment tax credit, available as of March 28, 2023; and
  • Clean Technology Manufacturing investment tax credit, available as of January 1, 2024.
• In the last few months, the government published draft legislation for the Clean Electricity and Electric Vehicle Supply Chain investment tax credits. It also published draft legislation to expand eligibility of the Clean Technology investment tax credit to include systems that generate heat, electricity, or both heat and electricity from waste biomass.

Anticipated Questions and Answers

1. How are the costs of the Clean Economy ITCs being accounted for?

The Clean Economy ITCs are accounted for in the government's fiscal framework based on their projected costs.

The Clean Economy ITCs will be reported in the Public Accounts once enacting legislation has received Royal Assent and after they have been claimed. Given that the first four investment tax credits received royal assent on June 20, 2024, there are no costs included in the 2024 Public Accounts which reports on the 2023-24 fiscal year.

2. The United States is planning to claw-back tax credit support that was provided through the U.S. Inflation Reduction Act. What is the impact on Canada and how is the government planning to respond?

Developments in the United States have created uncertainty and a challenging investment environment. At the same time, reduced support for clean technologies in the U.S. would make Canada more competitive for clean technology investment. The government is carefully tracking developments in the United States.

3. Now that investment tax credits are being claimed, is take-up in line with anticipated spending?

The first four investment tax credits received royal assent on June 20, 2024, which is after the 2023-24 fiscal year and is the most recent year in the Public Accounts of Canada. With the receipt of claims still at a preliminary stage, it is too early to determine take-up.

4. Some projects, like Dow and Honda have announced delays, how is the government responding?

The government is aware some projects have announced delays due to the market uncertainty that has resulted from the unjustified tariffs imposed by the U.S. on Canada.

The government will continue to monitor the situation.

Background

The Carbon Capture, Utilization and Storage Investment Tax Credit was announced in Budget 2021 with design details being proposed in Budget 2022.

• From 2022 through 2030, the credit rate would be set at:
  • 60 per cent for investment in equipment to capture CO₂ in direct air capture projects;
  • 50 per cent for investment in equipment to capture CO₂ in all other CCUS projects; and
  • 37.5 per cent for investment in equipment for transportation, storage, and use equipment.
• Budget 2023 introduced further enhancements to the tax credit, including an expansion of eligible equipment and the addition of B.C. as an eligible jurisdiction.
• The tax credit would be available to businesses that incur eligible CCUS expenses on or after January 1, 2022, with credit rates reduced by 50 per cent over the period from 2031 through 2040. The tax credit is no longer available after 2040.
• The tax credit received royal assent on June 20, 2024 and is available to businesses that have incurred eligible expenses, as of January 1, 2022.

The Clean Technology Investment Tax Credit was announced in the 2022 Fall Economic Statement.

• Represents a 30-per-cent refundable ITC for business investments in certain clean electricity generation equipment, stationary electricity storage, low-carbon heating, and non-road zero-emission vehicles and related charging and refueling infrastructure.
• Budget 2023 announced the expansion of eligibility to include certain geothermal energy equipment.
• The tax credit received royal assent on June 20, 2024 and is available for investments in eligible property that is acquired and that becomes available for use on or after March 28, 2023. The tax credit will be reduced by half in 2034, and no longer available after 2034.
• The 2023 Fall Economic Statement further expanded the credit to include certain systems that produce electricity, heat, or both electricity and heat from waste biomass.

The Clean Hydrogen Investment Tax Credit was first proposed in the 2022 Fall Economic Statement, with key design features announced in Budget 2023.

• This includes varying levels of support between 15 and 40 per cent of eligible projects costs, with the projects that produce the cleanest hydrogen receiving the highest levels of support, and a 15 per cent tax credit for equipment needed to convert hydrogen into ammonia.
• The tax credit received royal assent on June 20, 2024 and is available for investments in eligible property that is acquired and that becomes available for use on or after March 28, 2023. The tax credit will be reduced by half in 2034, and no longer available after 2034.
• The 2024 Fall Economic Statement proposed expanding the investment tax credit to methane pyrolysis as an eligible hydrogen production pathway.

The Clean Technology Manufacturing Investment Tax Credit was announced in Budget 2023.

• Represents a refundable credit equal to 30 per cent of the cost of investments in new machinery and equipment used to manufacture or process key clean technologies, and extract, process, or recycle key critical minerals.
• The credit rate will be reduced to 20 per cent for property that becomes available for use in 2032, 10 per cent in 2033, and 5 per cent in 2034. The tax credit is no longer available after 2034.
• The tax credit received royal assent on June 20, 2024 and is available to businesses that have incurred eligible expenses, as of January 1, 2024.
• Budget 2024 proposed adjustments to the tax credit to provide greater support and clarity to businesses engaged in the production of qualifying materials in polymetallic projects (i.e., projects engaged in the production of multiple metals). Draft legislative proposals for these adjustments were released for public consultation in August 2024.

The Clean Electricity Investment Tax Credit was announced in Budget 2023.

• Represents a refundable 15-per-cent ITCs to accelerate the investments needed to expand the capacity of our clean electricity grid.
• On June 6, the government launched consultations with Canadians on Budget 2023 measures to grow the clean economy to help develop their design details, including for the Clean Electricity ITC.
• The 2023 Fall Economic Statement announced an expansion of eligibility to include certain systems that produce electricity or electricity and heat from waste biomass.
• The proposed implementation details of the Clean Electricity ITC were announced in Budget 2024. Subsequently, the Government conducted consultations with Canadians on draft enabling legislation regarding the implementation details of this tax credit and expansion.

The Electric Vehicle Supply Chain Investment Tax Credit was announced in Budget 2024.

• Represents a refundable credit equal to 10 per cent of the cost of buildings used in key segments of the electric vehicle supply chain, for businesses that invest in Canada across three supply chain segments: electric vehicle assembly, electric vehicle battery production, and cathode active material production.
• Details of the credit were announced in the 2024 Fall Economic Statement. To be eligible for the credit, a corporation would be required to invest at least $100 million in each of the three qualifying EV supply chain segments. The credit rate would be reduced to 5 per cent for property that becomes available for use in 2033 or 2034. The tax credit would no longer be available after 2034. Other design elements would generally be based on those of the Clean Technology Manufacturing investment tax credit, where applicable. 
• Draft legislative proposals for the tax credit were released for public consultation in February 2025.

Budget 2023 announced that labour requirements would be attached to the following four ITCs: Clean Electricity; Clean Hydrogen; Clean Technology; and Carbon Capture, Utilization and Storage.

• To be eligible for the highest tax credit rates, businesses would need to pay covered workers prevailing wages and create apprenticeship opportunities.
• If the labour requirements are not met, then the credit rate would generally be 10 percentage points lower.
• The effective date for the labour requirements is November 28, 2023.

Consumer-Driven Banking

Issue

Canada's Consumer-Driven Banking Framework will enable Canadian consumers (individuals and businesses) to securely and efficiently share their financial data to access innovative financial products and services that can help them improve their financial outcomes.

The legislative framework is incomplete. The first component that contained key foundational elements received Royal Assent in June 2024. The remaining elements, including common rules, must still be tabled.

The department continues ongoing policy work in support of the development of the framework, including engaging with the Financial Consumer Agency of Canada (FCAC) and provincial and territorial governments.

Key points

• Consumer-driven banking will give Canadians greater control over their financial data, open the door to new services and providers, spur greater competition, lower costs, and encourage the creation of more tailored data-driven financial products and services.
• Canada's framework will address status quo risks associated with insecure data sharing, promote competition, and help unlock new opportunities for individuals and businesses. In doing so, the framework will encourage a more dynamic and diversified financial services ecosystem and a more productive economy.
• The government intends to introduce the remaining legislation to complete the Consumer-Driven Banking Framework and move quickly to the development of regulations. Concurrently, the Financial Consumer Agency of Canada is preparing for its role in supervising the Framework in close collaboration with other government partners.
• As the Government of Canada works to complete the framework, we remain committed to a made-in-Canada approach developed in collaboration with our provincial and territorial partners to ensure that consumers across the country can benefit equally from the Consumer-Driven Banking Framework.

Anticipated Questions and Answers

1. Why did the Department of Finance need additional funding for policy work related to consumer-driven banking?

Budget 2024 provided additional funding of $1.5 million annually for three years to the Department of Finance to complete the policy work necessary to stand up and maintain the consumer-driven banking framework, including the implementation of a national security regime. The funding supports five FTEs responsible for policy development, legislative and regulatory drafting, and stakeholder engagement. The Department is developing an entirely new and complex framework to govern the safe and secure sharing of consumer financial data.

Separate funding was provided to the FCAC in the 2024 Fall Economic Statement. Funding of $44.3M over 3 years is intended to support the implementation of the Consumer-Driven Banking Framework. Once the framework is complete, and the FCAC is accrediting participating entities, the FCAC will move to a cost recovery model similar to the one that exists for its existing supervisory responsibilities.

2. When will the framework be implemented?

The first part of the framework legislation introduced in the Budget Implementation Act, 2024, No. 1, which addressed governance, including expanding the mandate of the Financial Consumer Agency of Canada (FCAC), received Royal Assent in June 2024.

The remaining legislation, which contains the common rules for the framework, is still to be tabled. Once that legislation has received Royal Assent, the government will begin the formal regulatory development process.

The government will continue to consult with industry, federal regulators, provincial and territorial counterparts, and other key stakeholders. Once the full Framework is in place, the FCAC will begin the accreditation process for participating entities

3. Will participating entities have access to all of a consumer's data once they join the framework?

No, data will only be obtained if a consumer provides consent to the participating entity. If directed by a consumer, participating entities will be obligated to share certain data specified in the legislation, which includes chequing and savings accounts, investment products, and lending products, such as credit cards, lines of credit, and mortgages.

Participating entities will be obligated to provide certain information during the consent process to ensure that consumers have a full understanding of what they are sharing, the purpose it is being shared for and the length of time their consent will be valid. Participating entities will also be obligated to follow data minimisation principles and not collect information outside of what is necessary for the stated purpose.

Background

Consumer-driven banking, also known as open banking, refers to a Canadian framework that will allow consumers to securely transfer their financial data through application programming interfaces to approved service providers of their choice.

By giving Canadians greater control over their financial data, consumer-driven banking, will be the first manifestation of a data portability right in Canada's digital economy. The framework will enable a secure, level playing field for new service providers, spurring greater competition, lower costs, and more tailored financial products and services.

Consumer-driven banking supports the ability of Canadians to improve their financial outcomes by facilitating a more innovative and competitive financial services landscape. For example, improved access to credit, more effective budgeting tools, and lower costs on everyday financial products.

Since the Canadian government began reviewing open banking in 2018, similar policy initiatives have been delivered, and are being expanded, in the UK, Australia and other jurisdictions. Stakeholders continue to be highly attentive to its implementation and political delays.

After extensive review and consultation, the government announced in the 2023 Fall Economic Statement that it would introduce legislation through Budget 2024, along with a policy statement outlining the government's position. The policy statement identified 5 core elements of the framework, including governance, scope, accreditation, common rules, and technical standards.

In Budget 2024, the government announced that it would introduce the legislation in two parts. The framework was partially introduced in the Budget Implementation Act, 2024, No. 1 and received Royal Assent in June 2024. This included the Consumer-Driven Banking Act and amendments to the Financial Consumer Agency of Canada Act, which mandated the FCAC to oversee the framework and established other foundational elements of the framework including scope and technical standards.

Budget 2024 also provided $1.5 million annually for 3 years to the Department of Finance to complete the policy work necessary to stand up and maintain the consumer-driven banking framework including the implementation of a national security regime. The funding supports the development of the framework, engagement with the FCAC, and ongoing collaboration with external stakeholders, including industry and provincial and territorial governments.

The 2024 Fall Economic Statement subsequently provided the FCAC with $44.3M over 3 years to support the implementation of the Consumer-Driven Banking Framework. The government intended to introduce the remaining legislative elements at this time, however, Parliament was dissolved before this could occur. At this time, an updated policy statement was released describing the intentions for the remaining elements of the framework.

Further work on the development of regulations and implementation must follow Royal Assent of the completed legislation. The full framework, including regulations, is required for implementation. The previous government committed to a fully functioning framework in 2026.

Defence Spending (incl. Ukraine)

Issue

Emerging geopolitical challenges and the continued war in Ukraine are increasing pressure on all allies to reach NATO's target of spending 2 per cent of GDP on defence.

The government has announced a plan to increase defence spending to reach the 2 per cent target in 2025-26.

Key points

• In 2014-15, Canada's defence spending was roughly 1 per cent of GDP. Building up Canada's defence capabilities has been an important priority of this government.
• Thanks to investments the government previously announced, Canada was already on track to triple defence spending from 2014-15 to 2027-28.
• On June 9, the Government of Canada announced a plan to further increase investments in defence. This plan includes $9.3 billion in 2025-26 (cash basis) to reach 2 per cent of GDP.
• We will do so by rebuilding the Canadian Armed Forces (CAF), defending Canada's sovereignty, procuring more military equipment and making smart investments to support Canadian industry and workers.
• This plan includes $2 billion in military assistance to Ukraine in 2025-26. Since 2022, Canada has committed $6.5 billion in military assistance to Ukraine. The Government of Canada remains committed to help Ukraine defend itself against Russia's continued illegal invasion.
• There is a moral imperative to support Ukraine in its reconstruction and Canada can play a major role when it comes to sectors like energy, opening up opportunities for Canadian companies in an increasingly competitive space.

If pressed on future defence investment beyond 2025-26

• Yesterday's announcement was about making a historic investment in our Armed Forces and reaching 2 per cent of GDP this fiscal year. As the Prime Minister said, Canada will exceed 2 per cent of GDP in future years.
• As you know, Canada is preparing to participate in the NATO summit in the coming weeks where these issues will be further discussed. Additional details will be provided in due course.

*Sentence redacted*

Background

Defence Spending

Since 2017, Canada has steadily increased its defence spending. Since 2022 in particular, the government has accelerated this effort, committing more than $125 billion over 20 years to improve defence capacities.

NATO Allies have been working towards accelerating their defence spending to reach 2 per cent of GDP by 2025. On June 9, the government announced a plan to increase its investments in defence. This builds on the commitments made last year in Canada's renewed defence policy, Our North, Strong and Free (ONSAF), to strengthen Canada's sovereignty, security, and prosperity, and drive economic growth in this period of uncertainty.

The plan includes $9.3 billion ($8.3 billion on an accrual basis) in defence spending in fiscal year 2025-26 — bringing Canada's defence spending to 2 per cent of gross domestic product this fiscal year. The plan includes foundational investments in the Canadian Armed Forces (CAF), and investments to expand and enhance existing and emerging military capabilities, strengthen Canada's relationship with the defence industry, and diversify defence partnerships.

Continued Support to Ukraine

The plan announced on June 9 includes $2 billion in 2025-26 for military assistance for Ukraine.

Since the Russian invasion of Ukraine in 2022, Canada has now committed $21.7 billion in multifaceted support, including financial, military, humanitarian, and other types of assistance to Ukraine. This includes $6.5 billion in military assistance to Ukraine.

Additionally, since 2015, the CAF have provided training on a range of military skills to over 40,000 Ukrainian troops through Operation UNIFIER.

Major Transfers to Provinces and Territories in 2025-26

Issue

The Government of Canada provides significant financial support to provincial and territorial governments on an ongoing basis to assist them in the provision of programs and services.

There are four major federal transfers: the Canada Health Transfer, the Canada Social Transfer, Equalization and Territorial Formula Financing.

In 2025-26, major federal transfers to provinces and territories will total $103.8 billion.

Key points

• The four major federal transfers to provinces and territories are calculated each year based on legislated formulas and data.
• In 2025-26, the four major federal transfers to provinces and territories will increase by $4.4 billion, reflecting:
  • $2.6 billion in legislated growth under the Canada Health Transfer;
  • $507 million in legislated growth under the Canada Social Transfer;
  • $917 million in legislated growth under Equalization; and
  • $330 million in legislated growth under the Territorial Formula Financing.
• The federal government also recovers amounts from the Government of Quebec under the Quebec Abatement.
• In 2025-26, recoveries under Quebec Abatement are expected to grow 6.6 per cent to 8.0 billion, composed of:
  • $6.6 billion under the Alternative Payments for Standing Programs (APSP) and
  • $1.4 billion under the Youth Allowances Recovery (YAR).

Anticipated Questions and Answers

1. How was the envelope of the 2025-26 Canada Health Transfer (CHT) determined?

• The CHT grows with the three-year average of nominal gross domestic product (GDP) growth, with a minimum growth rate of:
  • 5 per cent per year until 2027-28, and
  • 3 per cent thereafter.
• In 2025-26, CHT grew by 5 per cent ($2.6 billion) to $54.7 billion.
  • The 5 per cent guarantee provided an additional $713 million in 2025-26 relative to the three‑year average GDP escalator.

2. What were the main drivers of the legislated growth in determining the 2025-26 major transfer payments?

• CHT and Equalization are indexed to grow with the three-year average of nominal GDP growth. In the case of the CHT, there is also a legislated guaranteed rate of 5 per cent per year from 2023‑24 to 2027‑28, after which the minimum growth rate reverts to 3 per cent.
• The three-year average of nominal GDP growth for 2025-26 was 3.63%. It is the average of GDP growth of 2.91% in 2023, and GDP growth forecasts of 4.30% in 2024 and 3.69% in 2025.
• The Canada Social Transfer is legislated to grow at 3 per cent per year.
• Territorial Formula Financing increases are mainly driven by growth in provincial and local government expenditures, a key component of the formula.

3. What is the timeline for the renewal of Equalization?

• The authority to make new Equalization and Territorial Formula Financing payments expires on March 31, 2029. The legislative renewal of the Equalization and Territorial Formula Financing must take place before that date.

Background

Major Transfers to Provinces and Territories in 2025-26:

Canada Health Transfer ($54.7 billion): The CHT is the largest major federal transfer to provinces and territories. It provides long-term predictable funding for health care and supports the principles of the Canada Health Act (CHA).

Canada Social Transfer (CST) ($17.4 billion): The CST is the third largest major federal transfer to provinces and territories (after the Canada Health Transfer and Equalization) and is intended to support three broad areas of social programs: post-secondary education, social assistance and social services, and early childhood development and early learning and childcare.

Equalization ($26.2 billion): Equalization ensures that less prosperous provinces have sufficient revenue to provide reasonably comparable levels of public services at reasonably comparable levels of taxation.

• Since 2009-10, Equalization funding is determined by a fixed envelope that grows in line with nominal GDP growth. Payments are first calculated based on a 10-province standard, i.e., the cost of raising the fiscal capacity of provinces below the national average to the average. Then recipients' payments are adjusted upward (floors) or downward (ceilings) to match the program envelope.
• The GDP growth track was originally introduced to operate as a ceiling to contain surging program costs due to rising oil prices and growing fiscal disparities between provinces. It generated savings of $17.6 billion from 2009-10 to 2017-18. Since 2018-19, due to declining fiscal disparities, the fixed envelope has been generating "floor payments" that have totaled $9.7 billion. The floor for 2025-26 is $1.0 billion.

Territorial Formula Financing (TFF) ($5.5 billion): TFF is an unconditional transfer to enable territorial governments to provide their residents a range of public services comparable to those offered by provincial governments, at comparable levels of taxation, recognizing the high cost of providing public services in the North.

Quebec Abatement (-$8.0 billion): The Quebec Abatement is the sum of the Alternative Payments for Standing Programs and the Youth Allowances Recovery. It consists of a reduction of 16.5 percentage points of federal personal income tax for all tax filers in Quebec.

The 16.5 percentage points are the sum of 13.5 percentage points ($6.6 billion) of federal income tax abated under the Alternative Payments for Standing Programs and 3 percentage points ($1.4 billion) abated for the discontinued Youth Allowances Program.

The Quebec Abatement was introduced in the 1960s when—in order to support the delivery of certain social programs in Quebec—the federal government reduced personal income tax rates and Quebec increased its rates by an equivalent amount.

Quebec continues to receive the value of these extra tax points through its own income tax system, in lieu of cash, while other provinces receive the corresponding amounts in cash.

Transfers to Quebec for the Canada Health Transfer, Canada Social Transfer and Equalization are shown in the budget on the same basis as transfers to other provinces. However, since part of the Quebec transfer is made through lower federal taxes, it is necessary to net this amount out of transfer program spending.

This arrangement has no net impact on federal transfers, Quebec's receipts or other provinces' receipts.

• Excluded other fiscal arrangements: Statutory Subsidies, Québec Abatement, Fiscal Stabilization, Canada Wide ELCC, and Deductions/Reimbursements related to the Canada Health Act.

Public Debt Charges

Issue

Public debt charges represent approximately 10 per cent of total expenses reported in the 2025-26 Main Estimates.

Key points

• Public debt charges in the 2025-26 Main Estimates are forecasted to reach $49.1 billion, a $0.7 billion increase from the 2024-25 Estimates to date.
• This includes $43.9 billion for interest on unmatured market debt and $5.2 billion for other interest costs including interest on liabilities for federal public service pension plans, deposit and trust accounts and other specified purpose accounts.
• The increase is due to higher borrowing requirements, offset in part by lower interest rates.
• The 2024 Fall Economic Statement projected that public debt charges in 2025-26 would be $54.2 billion on an accrual basis. However, debt charges in the Main Estimates are presented on a modified cash method of accounting and exclude certain expenses that were captured in the Fall Economic Statement, primarily adjustments to interest on pension liabilities and capital lease obligations.
  

Anticipated Questions and Answers

1. What are the components of public debt charges?

Public debt charges in the Estimates are separated into two broad categories:

• Interest on Unmatured Debt consists of payments that will be made over the course of the year on market debt such as outstanding Government of Canada bonds and treasury bills. The 2025-26 Main Estimates include $43.9 billion for unmatured debt.
• Other Interest Costs represent the interest on liabilities for federal public service pension plans, deposit and trust accounts and other specified purpose accounts. The 2025-26 Main Estimates include $5.2 billion for other interest costs.

Background

• The forecast for public debt charges published in the Fall Economic Statement 2024 were revised downwards in the near-term compared to Budget 2024, owing primarily to lower short- and long-term interest rates as forecasted by private sector economists until 2026-27, and lower inflation impacts on Real Return bonds in 2025‑26.
• Over the remainder of the forecast horizon, debt charges were projected to be higher compared to Budget 2024 due to higher short-term interest rates and higher borrowing requirements.

• According to the March 2025 Fiscal Monitor (published May 30), public debt charges for the fiscal year 2024-25 were $53.7 billion, as forecasted in the Fall Economic Statement 2024.

Refocusing Government Spending (RGS)

Issue

The government's progress in achieving savings commitments identified in Budget 2023 and the 2023 Fall Economic Statement (FES) as part of Refocusing Government Spending (RGS).

Key points

• In Budget 2023 and the 2023 Fall Economic Statement, the government announced a total of $15.8 billion in savings over five years, starting in 2023-24, and $4.8 billion per year ongoing for RGS Phases 1 and 2.
• The 2024-25 Main Estimates reported on the first phase of RGS, and showed refocused spending of $2.3 billion in 2024-25, $2.8 billion in 2025-26, and $3.6 billion in 2026-27 and ongoing, representing about 75% of the announced savings.
• Budget 2024 announced that the remaining savings from RGS will be obtained primarily through natural attrition in the public service. With planned savings starting in 2025-26, the results of these commitments will be made available in due course.

Anticipated Questions and Answers

1. Where are the RGS savings to date reported?

(Generally a TBS lead) The President of the Treasury Board is overseeing the implementation of RGS in respect of appropriated entities. Supplementary Estimates (B), 2023-24 included details on $500 million in travel and professional services reductions by organization for 2023-24. These were the only reductions required for 2023-24.

The 2024–25 Main Estimates included an online annex outlining reductions related to RGS for all organizations subject to the exercise, for 2024-25, 2025-26 and 2026-27 and ongoing. Departments also reported on their specific reduction plans in their 2024-25 Departmental Plans.

The 2024-25 Main Estimates showed refocused spending of $2.3 billion in 2024-25, $2.8 billion in 2025-26, and $3.6 billion in 2026-27 and ongoing. The disclosure noted that additional reductions to meet the Budget 2023 targets would be required ($0.3 billion in 2025-26 and $0.5 billion in 2026-27), which were communicated as an extension of the FES 2023 exercise (Responsible Government Spending).

Budget 2024 announced that the remaining savings will be obtained primarily through natural attrition in the public service. Savings will start in 2025-26, and results will be released in due course.

2. Budget 2024 announced that over the next four years, the government expects the public service population to decline by approximately 5,000 full-time equivalent positions from an estimated population of roughly 368,000 as of March 31, 2024. Does this mean there will be cuts to public service FTEs and involuntary separations? 

It is expected that natural attrition and internal redeployments will offer flexibility to manage possible reductions to employment. The 5,000 FTE positions estimate should also be considered in the context of an annual public service departure rate of roughly 4% (4.3% in 2019-20), representing roughly 15,000 positions. Already, as of March 31, 2025, the public service population declined by almost 10,000 from 2024 levels, from 367,772 to 357,965.

(TBS lead) The Speech from the Throne includes a commitment to cap the public service. Further details will be provided in due course.

Background

In Budget 2023 and the 2023 Fall Economic Statement, the government announced a total of $15.8 billion in savings over five years, starting in 2023-24, and $4.8 billion per year ongoing. Savings have been refocused towards the priorities that matter most to Canadians, including health care, housing, and an economic growth plan and industrial strategy that create well-paying jobs for workers.

Following Budget 2023, the government carried out the first phase of RGS to identify areas of duplication, low value for money, or lack of alignment with government priorities, with a particular focus on reducing travel and consulting costs. Care was taken to ensure that departments and agencies could meet their reallocation target without impacting direct benefits and service delivery to Canadians; direct transfers to other orders of government and Indigenous communities; and the Canadian Armed Forces. Most of the reductions from this first phase were applied in the Supplementary Estimates (B), 2023-24 and the 2024–25 Main Estimates.

Budget 2024 announced that the government would deliver on its remaining savings commitments from Budget 2023 and FES 2023 by seeking to achieve savings primarily through natural attrition in the federal public service. Savings will start in 2025-26, and results on these commitments will be released in due course.

The 2024 Fall Economic Statement also announced the launch of a strategic review of government operations and programs with a focus on expanding the use of AI in the public service to both improve efficiency and service delivery. The review will be led by the Privy Council Office's AI Secretariat, and results will be announced in Budget 2025. No savings have been booked for this review.

Department of Finance-specific RGS Phase 1 Plan

The Department of Finance detailed in its 2024-25 Departmental Plan how it would achieve the Refocusing Government Spending Phase I target, by seeking to reduce spending in the following areas:

• Professional services and travel – utilizing internal resources in lieu of external contractors and contracts, increasing the use of virtual meetings and conferences where possible, and reducing the number of departmental representatives attending international meetings.
• Other operating measures – achieving salary budget savings across the Department through attrition, delays in staffing, reduction in casual employees and students, and realizing cost savings related to departed employees.
• Research and Policy Initiatives Assistance Program – modifying the funding approach of the program by shifting to an as needed basis in place of an ongoing basis.
• Tax Competitiveness Monitoring – gradually reducing initiative funding over time, while continuing to utilize internal resources to monitor and react to tax competitiveness pressures from tax reforms in other countries.

Trans Mountain

Issue

The Trans Mountain pipeline system has been operating for over a year. Trans Mountain Corporation (TMC) is making progress on establishing a track record of successful operations and developing growth opportunities, while its regulatory tolls proceedings are being adjudicated by the Canada Energy Regulator. The government is working to advance Indigenous Economic Participation in Trans Mountain. Advancement on these issues will further de-risk and increase the value of Trans Mountain.

Key points

• The government's acquisition of the Trans Mountain Pipeline and the completion of the expansion was a necessary investment in the national interest.
• Its operation today provides a unique outlet for Canadian energy to global markets, providing pricing support for Western Canadian oil, which in turn supports jobs and producers.
• The government remains committed to Indigenous economic participation in Trans Mountain as an opportunity to create economic benefits for Indigenous communities.

Project Benefits

• Trans Mountain helps Canada get a fair price for its oil and refined petroleum products by increasing export capacity to international markets. Since the start of commercial operations in May 2024, shipments have been exported to Asia (especially China, South Korea and India) and the US.
• The project is expected to generate up to $38 billion in additional provincial royalties and $21 billion in corporate income taxes, and to increase GDP by up to $127 billion over 20 years, according to Ernst & Young.
• *Bullet redacted*
• The Trans Mountain Expansion Project created 37,000 jobs, with 25% of contracts awarded to Indigenous businesses and partnerships, totalling $6.5 billion.

Project Costs/Government's Investment

• The pipeline represents a long-term investment and the government continues to work towards a positive return on its investment over time.
• TMC paid $311 million in distributions in the first quarter of 2025 consisting of $163 million in dividends and $148 million in interest.
• The cost of the expansion project is estimated at $34.5 billion, based on TMC's estimate filed with the CER in fall 2024.

Indigenous Engagement

• The 2025-26 Main Estimates contain $11 million in funding for Indigenous engagement on Trans Mountain.
• Indigenous economic participation in Trans Mountain will be an opportunity to create economic benefits for Indigenous communities.
• In September 2023, government officials met with Indigenous groups in Vancouver to share details about the next steps in the process. The government is working to re-engage with groups at the right moment to advance the process.

Anticipated Questions and Answers

1. Given the strategic importance of energy infrastructure and the need to find markets other than the United States, is the federal government rethinking the sale of Trans Mountain?

The pipeline supports Canadian producers by providing access to global markets.

The pipeline is contributing to good jobs and economic growth across Canada. The Trans Mountain expansion is expected to increase GDP by up to $127 billion over 20 years, according to Ernst & Young.

The government has indicated it did not intend to be the long-term owner of the project and would launch a divestment process in due course.

2. What is the current status of work towards Indigenous economic participation in Trans Mountain?

The Department of Finance is continuing internal work to prepare to re-engage with eligible Indigenous groups to advance Indigenous economic participation in Trans Mountain.

3. Why did the government provide additional financing to TMC?

In December 2024, the government replaced TMC's third-party financing with government financing to considerably reduce interest costs.

This provides savings to taxpayers of approximately $3.3 billion.

If pressed

Accounting standards require that when government financing has a lower interest rate than market financing, this is accounted for as a "government grant".

Background

• On August 31, 2018, the Government of Canada purchased the Trans Mountain entities including the existing pipeline, related terminals and other assets as well as the proposed expansion project for a final closing price of $4.4 billion.
• The Trans Mountain expansion project increased the capacity of the pipeline from 300,000 barrels per day (bpd) to 890,000 bpd. 
• In February 2022, the then Minister of Finance announced that no new public money would be invested in the project, and that Trans Mountain Corporation would secure construction financing from third-party debt markets. In December 2024, following completion of the pipeline, the government replaced TMC's third-party debt with government financing (via the Canada Account) to considerably reduce interest costs.
• The Trans Mountain Expanded System began commercial operations on May 1, 2024.
• In regulatory filings submitted to the CER in October 2024, TMC provided a revised cost estimate of approximately $34.5 billion.
• TMC continues to explore growth projects that could further increase capacity and the value of the pipeline in the coming years.

2025-26 Main Estimates – Explanation of Changes

2024-25 Main Estimates vs. 2025-26 Main Estimates

The following tables outline the year-over-year changes since the 2024-25 Main Estimates.

Increases in voted items are generally a result of additional funding received for initiatives or programs that were approved via a Treasury Board submission.

The increase in budgetary expenditures in 2025-26 Main Estimates is mostly attributable to a $193.8 million transfer payment to Newfoundland and Labrador.

Decreases in voted items are generally a result of the expiration of time limited funding for specific initiatives or programs.

The increase in budgetary statutory estimates is due to the following factors:

A. Canada Health Transfer – an increase of $2,604.0 million

• The Canada Health Transfer is a federal transfer provided to provinces and territories in support of health care and increases year-to-year based on a three-year moving average of nominal gross domestic product growth, with funding guaranteed to increase by at least 3 per cent per year.
• The increase of $2,604.0 million represents the 5 per cent minimum growth rate guaranteed by the federal government in February 2023.

B. Interest on Unmatured Debt – an increase of $1,909.0 million

• Interest on Unmatured Debt are payments that will be made over the course of the year on the Government's market debt (i.e., Government of Canada bonds, Treasury Bills and retail debt). The interest recorded is dependent upon the level and composition of unmatured debt, the effective interest rates applicable and the cost of servicing the debt.
• An increase of $1,909.0 million, reflecting the revised projections as noted in the 2024 Fall Economic Statement.

C. Fiscal Equalization – an increase of $916.9 million 

• The Fiscal Equalization program ensures that less prosperous provinces have sufficient revenue to provide reasonably comparable levels of public services at comparable levels of taxation, thereby reducing fiscal disparities among provinces. Equalization payments increase from year-to-year based on a three-year moving average of nominal GDP growth.
• The increase of $916.9 million reflects the 3.6% gross domestic product-based escalator being applied to the 2024-25 level.

D. Other Interest Costs – an increase of $612.0 million

• Other Interest Costs represent the interest on liabilities for federal public service pension plans, deposit and trust accounts and other specified purpose accounts.
• The interest recorded is a statutory requirement and is dependent upon the level and composition of pensions and other liabilities, as well as the applicable effective interest rates.
• The increase of $612.0 million reflects revised projections as provided in Fall Economic Statement 2024 compared to the previous amounts based on Fall Economic Statement 2023 due to updated modelling and revised interest rate assumptions of certain other specified purpose accounts.

E. Canada Social Transfer – an increase of $507.3 million

• The Canada Social Transfer is the federal transfer provided to provinces and territories in support of social assistance and social services, post-secondary education, and programs for children.
• The $507.3 million increase is a result of the legislated 3 per cent annual growth rate.

F. Territorial Financing – an increase of $329.9 million

• The Territorial Formula Financing program enables territorial governments to provide their residents with programs and services that are comparable to those provided in the rest of Canada, at comparable levels of taxation, taking into account the higher costs of services and unique circumstances of the North.
• The $329.9 million increase reflects the incorporation of new and updated data for territorial expenditure requirements and revenue capacities into the program's legislated formula.

G. Payments to International Bank for Reconstruction and Development Financial Intermediaries Fund for Ukraine – an increase of $200 million

• The $200 million payment to the World Bank Group Financial Intermediaries Fund in support of Ukraine is part of Canada's contribution through the G7 Leaders Extraordinary Revenue Acceleration Loan Mechanism to be used to support projects, programs, and activities that address Ukraine's budget, recovery, and reconstruction needs.

H. Debt Payments on behalf of poor countries to International Organizations – an increase of $36.7 million

• At the G8 Summit in Gleneagles in 2005, donors, including Canada, agreed to have international financial institutions cancel 100 per cent of the debts owed to them by eligible poor countries to free up resources to help such countries achieve Millennium Development Goals. To cover its share of the costs, Canada committed a total of $2.5 billion over the 50-year lifespan of this initiative. Canada's first payment for this initiative was made in fiscal year 2005-06. Annual payments will continue until 2054.
• The increase of $36.7 million is in line with the revised payment schedule agreed to by the Government of Canada and the World Bank.

I. Hibernia Dividend Backed Annuity Agreement – an increase of $36.0 million

• The Hibernia Dividend Backed Annuity Agreement is an agreement between Canada and Newfoundland and Labrador entered into in 2019 that will provide defined, annual payments to the province between 2019 and 2056 totaling $3.3 billion. The payments were based on projected free cash flows of the Canada Hibernia Holding Corporation (CHHC), a Crown corporation that administers Canada's working interest in the Hibernia oil project, over the remaining life of the project. The province will also pay $800 million to Canada between 2045 and 2052, resulting in a net benefit of $2.5 billion to the province.
• The amount for 2025-26 agrees to the schedule of annuity payments in the Hibernia Dividend Backed Annuity Agreement.

J. Canada Infrastructure Bank – an increase of $26.1 million

• Through the Canada Infrastructure Bank (CIB), the federal government has committed $35 billion to support infrastructure projects across the country. The CIB will focus on priority investment sectors including transit, green infrastructure, clean power, broadband access, and trade and transportation.
• The $26.1 million increase reflects payments to the CIB to carry out approved activities as outlined in their 2024-25 to 2028-29 Corporate Plan.

K. Contribution to Employee Benefit Plans – an increase of $2.7 million

• The amount for Contribution to Employee Benefit Plans is set by the Treasury Board Secretariat. The 2025-26 percentage is 15.3 per cent of salary funding and represents the government's contribution to various employee benefit plans.
• The increase of $2.7 million is due to a higher percentage being applied than the prior year and increases in salary funding included in the 2025-26 Main Estimates.

L. Statutory Subsidies – an increase of $0.3 million

• Statutory Subsidies are annual grants paid to the provinces as a result of agreements entered into upon their joining Canada. These amounts are set out in the British North America Acts (BNA Acts) (renamed the Constitution Acts in 1982) and related acts.
• The payment for 2025-26 is an estimate, based on the final computation of 2024‑25, made in December 2024, which incorporated Census 2021 population data.

M. Youth Allowances Recovery – an increase in recovery of $110.4 million 

• The Youth Allowances Recovery is a recovery from the province of Quebec related to the discontinued Youth Allowances Program.
• Recoveries from the province of Quebec are based on personal income tax data. The $110.4 million increase in the recovery is a result of the forecasted growth of national Basic Federal Tax as calculated in October 2024.

N. Alternative Payments for Standing Programs – an increase in recovery of $490.3 million

• The Alternative Payments for Standing Programs is a recovery from the province of Quebec of an additional tax point transfer (13.5 points) above and beyond the tax point transfer that used to be part of the Canada Health Transfer and the Canada Social Transfer.
• In the 1960s, Quebec chose to use the federal government's contracting-out arrangements for certain federal–provincial programs. Since Quebec, like other provinces, receives its full cash entitlement under the Canada Health Transfer and Canada Social Transfer, the value of these tax points is reimbursed to the Government of Canada each year.
• The increased recovery of $490.3 million is a result of the forecasted growth of national Basic Federal Tax as calculated in October 2024.

2025-26 Main Estimates – Program Expenditures with Description

2025-26 Main Estimates – Budgetary Statutory Expenditures with Description