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Briefing binder created for the Minister of Finance and National Revenue on the occasion of his appearance before the Senate Committee of the Whole on June 17, 2025, on Bill C-4, Making Life More Affordable for Canadians Act

Table of Contents

Scenario Note

Minister of Finance and National Revenue
Appearance at Senate Committee of The Whole
Tuesday, June 17, 2025 - approximately 7 p.m. to 8:35 p.m.

Description

The Senate will consider Bill C-4, An Act respecting certain affordability measures for Canadians and another measure for approximately 95 minutes in a Committee of the Whole. The Minister of Finance and National Revenue will participate in the debate. He will be supported by the following officials:

Location

Chamber, Senate of Canada Building

Time and Arrival

Debate will begin around 7 p.m. and end by 8:35 p.m.

Background

Prepared Remarks

Notes for remarks for the Minister of Finance
Senate Committee of the Whole (5 minutes)
Bill C-4
Senate of Canada – June 17, 2025

Introduction

Thank you, Madame Speaker.

It is an honour to address the Senate on Bill C-4, the Making Life More Affordable for Canadians Act, as it pertains to building a greater, more inclusive, and more robust economy for all Canadians.

Bill C-4 will implement the middle-class tax cut, help first-time home buyers afford a new home, formally remove the consumer carbon price from law, and make amendments to the Canada Elections Act.

This bill, honourable Senators, would provide the change Canadians want and deserve, and I thank you for considering my perspective on why it is worthy of the Senate’s expedited support.

Recent investments in affordability

First off, with the adoption of this legislation, the lowest marginal personal income tax rate would be reduced from 15% to 14% effective July 1, 2025. This tax cut would help hard-working Canadians keep more of what they earn as they build a strong future for themselves, their families and their communities.

The majority of the benefits of this tax cut – which would begin on July 1 – would go to Canadians who need it most, meaning those with incomes in the two lowest tax brackets, with nearly half of the tax savings going to those in the lowest bracket.

This is great news for Canadians in every corner of this country facing affordability challenges.

Second, to make buying a new home easier and to increase the construction and supply of new homes across the country, Bill C-4 would eliminate the Goods and Services Tax (GST) for first-time home buyers on new homes up to $1 million and reduce the GST for first-time home buyers on new homes between $1 million and $1.5 million.

As a result, first-time home buyers would 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. This will allow more young people and families from coast to coast to coast to realize their dream of owning a home.

Third, Bill C-4 would formally remove from law the federal consumer fuel charge, effective April 1, 2025. At the same time, the government is making clear that a price on pollution for large emitters will continue to be a key component of our plan to build a strong economy and a greener future for our children and grandchildren.

And finally, Bill C-4 seeks to clarify Parliament’s intent that the activities of federal political parties involving personal information fall exclusively under federal jurisdiction and the Canada Elections Act, since May 31, 2000. The bill also proposes additional requirements for a federal political party’s privacy policy going forward.

Conclusion

Madame Speaker, the legislation I highlighted today is a critical component of our government’s plan to put people first, and to build a better economy where everyone has a real and fair chance at success – the strongest in the G7.

I encourage my Senate colleagues to help us in this important work by voting in favour of Bill C-4.

Thank you.

Part 1 – Lowering Income Tax Rates for Individuals

Key Messages

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 intends to update its source deduction tables for the July to December 2025 period so that pay administrators may be 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.

  2. How much will the tax rate reduction cost?

    This middle-class tax cut is expected to provide $2.6 billion in tax relief to Canadians over the next six months and $5.4 billion in 2026, the first full year when the tax rate is 14 per cent. Over five years, the total fiscal cost would be $27.2 billion.

  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 those with incomes in the two lowest tax brackets 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).

  4. Why is the credit rate applied to most non-refundable tax credits also being lowered?

    The rate applied to most non-refundable tax credits is linked to the first personal income tax rate to ensure individuals claiming similar amounts receive the same amount of tax relief, regardless of their income level. This means that the credit rate will automatically adjust to reflect the lower tax rate of 14.5 per cent for 2025 and 14 per cent starting in 2026.

Background

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.

This measure 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.

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 (i.e., on July 1, 2025), 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. 

This change would benefit nearly 22 million Canadians. 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.

The Canada Revenue Agency would update its source deduction tables for the July to December 2025 period so that 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. 

Part 2 – First-Time Homebuyers’ GST Rebate

Key Messages

Anticipated Questions and Answers

  1. Why doesn’t the policy apply to recent purchases that have not yet closed?

    Any time there is a change in policy, there will be people that fall on either side of the change. Individuals that have already decided to buy a new home agreed to a price that did not reflect the measure.

  2. What is this measure meant to do?

    The measure would eliminate the GST for first-time home buyers of homes up to $1 million and reduce the GST for first-time home buyers of homes between $1 million and $1.5 million. This will reduce the upfront cost of buying a new home for these buyers in order to help them enter the housing market.

  3. 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.

  4. Why does the test to determine whether a person is a first-time home buyer only look back four years?

    This timeframe is consistent with that used for the other federal tax measures including the First Home Savings Account, the Home Buyers’ Plan, and the Homebuyers’ Tax Credit and will facilitate administration and compliance.

If pressed:

  1. What is the government hoping to achieve by removing the GST on new homes for first-time home buyers? Won’t this measure just increase demand and put upwards pressure on housing prices?

    This measure is likely to incentivize first-time home buyers to consider buying a newly built home rather than a home in the re-sale market. This increased demand for newly built homes will encourage developers to build more homes to meet this demand, which could in turn have a positive effect on housing supply. Expanding the housing stock is key to addressing housing affordability issues.

  2. Why is the measure temporary? Would you consider making it permanent?

    The measure is intended to not only assist first-time home buyers enter the housing market, but also to encourage developers to quickly ramp up supply to meet this demand. The temporary nature of the measure is expected to accelerate this activity to take advantage of the availability of the rebate.

  3. Does this measure also relieve the provincial portion of HST? If not, can provinces choose to relieve the provincial portion of HST?

    This is a federal rebate that applies only to the 5% GST or federal component of the HST. It does not apply to the provincial component of HST. Questions regarding the provincial component of the HST should be directed to the HST provinces.

  4. How many more units will be built because of the measure?

    This measure may incentivize first-time home buyers to consider buying a newly built home rather than a home in the re-sale market. This increased demand for newly built homes could encourage developers to build more homes to meet this demand. It would be imprudent to estimate how many additional housing units will be built because of this measure given the many other factors that impact housing supply. However, the measure is expected to have a positive impact on housing supply.

  5. What is the estimated fiscal cost of the measure?

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

    *Information redacted*

  6. This measure applies to a relatively small number of homes. It only applies to new homes, which are small fraction of a home sales, and then, only those purchased by a first-time home buyer. Will this measure move the needle on housing affordability?

    It is estimated that at maturity the measure would apply to approximately 47,000 newly built homes annually. This will provide meaningful relief to young Canadians across the country in their pursuit of owning a home.

  7. What about renters—what measures are being taken to support those who aren’t looking to buy a home but are struggling with high rents?

    The government has already introduced a 100% GST rebate for new purpose-built rental housing, which is having a positive impact on the construction of new rental housing. This increased supply of rental units will in turn help make renting more affordable for those who cannot or do not want to own their home.

  8. How does this measure support Canadians in high-cost markets like Vancouver or Toronto versus smaller communities?

    In addition to fully relieving the GST on new homes up to $1 million, the measure provides a partial GST rebate for homes between $1 million and $1.5 million. This feature of the measure is intended to ensure that the rebate is also available in high-cost markets like in Vancouver and Toronto.

Background

This measure introduces the First-Time Home Buyers’ GST Rebate, which is intended to assist individuals entering the housing market for the first time and to encourage real estate developers to increase housing supply. The rebate would provide 100% relief of the GST on new homes priced up to $1 million and partial GST relief for homes priced between $1 million and $1.5 million. The rebate would provide up to $50,000 of relief on the purchase of a new home by an eligible first-time home buyer.

The measure would generally be available to eligible first-time home buyers, who are individuals that:

The types of housing for which the relief would apply would be the same types of housing eligible for the existing GST New Housing Rebate, including:

The measure would generally apply to purchases under agreements entered into on or after May 27, 2025 and to owner-built homes where construction begins on or after May 27, 2025. The measure is temporary and would generally not apply to new housing purchases under an agreement entered into after 2030 or to housing for which construction begins after 2030.

Part 3 – Removing the consumer carbon price from Canadian law

Key Messages

Anticipated Questions and Answers

  1. Why is legislation needed if the fuel charge application has already been ceased via regulations?

    Repealing the fuel charge legislative framework under Part I of the Greenhouse Gas Pollution Pricing Act (GGPPA) would provide certainty to Canadian consumers and businesses about the permanent elimination of the consumer carbon price.

  2. Why is it necessary to proceed with the repeal in phases rather than all at once?

    A sequential repeal of the fuel charge provisions would help ensure an orderly process for charge payers. Charge payers will have a further six months to claim rebates to which they are entitled, for example for fuel charge paid on fuel purchased prior to April 1, 2025 but exported on or after that date from a province or territory where the fuel charge applied. Various administrative provisions will remain in the legislation for a longer period to provide continuity and certainty for final wind-down activities, including CRA administrative processes that may continue to rely on existing rules such as definitions. These additional phases of repeal relate to fuel charge obligations for reporting periods prior to April 1, 2025. The fuel charge ceased to apply as of April 1, 2025.

If pressed:

  1. What is the impact of the fuel charge repeal on emissions?

    As the fuel charge was effectively already removed via regulations made in March 2025, there is no incremental impact on emissions from the proposed legislative amendments.

    That said, as indicated in the Regulatory Impact Analysis Statement accompanying the regulations made in March 2025, the Department of Finance Canada, using Environment and Climate Change Canada’s emissions data, estimated that the elimination of the fuel charge would lead to a loss of 12.57 Mt cumulative greenhouse gas emissions reductions from 2025 to 2030.

    Impacts on emission reductions may be mitigated by other future climate policies implemented in place of the fuel charge. The federal government intends to refocus federal carbon pollution pricing requirements on ensuring carbon pricing systems are in place across Canada on a broad range of greenhouse gas emissions from industry.

  2. What is the impact on inflation of the fuel charge repeal?

    As the fuel charge was effectively already removed via regulations made in March 2025, there is no incremental impact on inflation from the proposed legislative amendments.

    That said, the Department of Finance estimates that eliminating the fuel charge could reduce the Consumer Price Index by about 0.7 percentage point in the first year.

    Statistics Canada data showed a year-over-year decrease in CPI in April compared to March, primarily driven by a reduction in energy prices.

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 remove 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:

The measure does not extend to Part 2 of the GGPPA, which implements an output-based pricing system on large emitters in listed jurisdictions. 

Part 4 – Canada Elections Act

Key Messages

Anticipated Questions and Answers

  1. If Bill C-4 is passed, what will be required of federal political parties with respect to privacy?

    If passed, eligible and registered federal political parties will need to ensure their personal information protection policies (privacy policies) comply with new requirements. For example, privacy policies will need to be updated to be made available in both official languages, written in plain language, and state the types of personal information the party collects, retains, uses, discloses, disposes of, etc. Federal political parties will also be required to explain how they carry out their activities in relation to personal information using illustrative examples.

  2. What happens if someone does not comply with the privacy policy?

    Federal political parties and those acting on their behalf (e.g., volunteers) will be required to comply or may newly face consequences under the Canada Elections Act’s existing enforcement regime, including caution and information letters or, if warranted, an administrative monetary penalty of $50 to $1,500 for a person or $300 to $5,000 for an entity.

  3. Will the Privacy Commissioner have a role?

    No. Consistent with the regulation of federal political parties through the Canada Elections Act, regulatory oversight would remain with the Chief Electoral Officer and the Commissioner of Canada Elections. The Privacy Commissioner does not have a mandate under the Act. This bill does not change that.

  4. Why are federal political parties not covered by the Personal Information Protection and Electronic Documents Act (PIPEDA) or the Privacy Act?

    PIPEDA applies to organizations engaged in a commercial activity, while the Privacy Act applies to federal government institutions. Because federal political parties are neither engaged in commercial activities nor government institutions, neither legislation governs the personal information practices of federal political parties. As unique democratic actors, Parliament has addressed the personal information practices of federal political parties exclusively under the Canada Elections Act, which governs the registration of federal political parties and regulates their other activities.

  5. Why was this measure included in a tax bill?

    It was included in the earliest available vehicle to clarify Parliament’s intent regarding questions pertaining to federal jurisdiction of privacy requirements for federal political parties.

  6. Why is the regime being made retroactive to 2000?

    In June 2023, the Canada Elections Act was amended to clarify that it was and remains the national, uniform, exclusive and complete regime for federal political parties’ dealings with personal information. However, the 2023 amendment itself was not expressly retroactive despite clear intention on the Government’s part. Consequently, Bill C-4 seeks to further clarify Parliament’s intention to assert federal jurisdiction over federal political parties’ dealings with personal information since 2000, which is when the Act was repealed and replaced through a major modernization.

  7. Why would federal political parties be exempt from complying with provincial personal information protection laws? Is this in response to the ongoing litigation out of British Columbia?

    In 2022, British Columbia’s Information and Privacy Commissioner found that the provincial act, the Personal Information Protection Act, applies to federal political parties in the province. This opens the door to competing authorities and a patchwork of provincial privacy rules applicable to federal political parties, where the obligations of federal political parties vary across jurisdictions, which could lead to uncertainty, inefficiency, confusion, and ultimately an erosion of trust amongst voters in how their personal information is managed. The federal government has been clear that the Canada Elections Act provides a uniform federal approach in respect of federal political parties’ activities involving personal information, including but not limited to collection, use, disclosure, retention, and disposal.

  8. Why are the more robust privacy requirements that were part of Bill C-65, which died on the order paper, not included as part of this proposal?

    The Canada Elections Act is regularly reviewed for improvements, but the priority at this time is to clarify Parliament’s intent regarding federal jurisdiction over federal political parties’ dealings with personal information.

Background

Bill C-4, An Act respecting certain affordability measures for Canadians and another measure, seeks to clarify Parliament’s intent that the activities of federal political parties involving personal information fall exclusively under federal jurisdiction and the Canada Elections Act.

If passed, Bill C-4 would underscore that federal political parties are not required to comply with provincial personal information protection laws, consistent with Parliament’s intention that the Canada Elections Act is the exclusive, national, and uniform personal information protection regime for these parties across Canada.

It would further clarify that this has been the case since May 31, 2000, which is when the Canada Elections Act was repealed and replaced through a major modernization.

The bill also proposes additional requirements for a federal political party’s privacy policy going forward, including that it: be available in both official languages; be written in plain language; state the types of personal information it collects, retains, uses, discloses, disposes, etc.; and explain how federal political parties carry out their activities in relation to personal information, including using illustrative examples.

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2025-10-15