Government releases draft legislation for previously announced tax measures

August 15, 2025 – Ottawa, Ontario – Department of Finance Canada

Today, the Minister of Finance and National Revenue, the Honourable François-Philippe Champagne, released for consultation draft legislative proposals that would implement a range of previously announced and other tax measures, including measures that would:

• Expand what qualifies as an eligible small business corporation share and relax certain conditions for the rule on the capital gains rollover on business investment to apply, as announced in the 2024 Fall Economic Statement.
• Add a $10 million capital gains exemption for qualifying sales of businesses to worker co-ops and make technical changes to the existing exemption for sales to employee ownership trusts, as announced in Budget 2024.
• Increase the annual expenditure limit and taxable capital phase-out thresholds for the enhanced 35 per cent scientific research and experimental development investment tax credit, extend the refundable credit to small public corporations, and reinstate the availability of the credit for capital expenditures, as announced in the 2024 Fall Economic Statement.
• Enhance the reporting requirements for non-profit organizations to improve transparency in the sector, as announced in the 2024 Fall Economic Statement.
• Implement the Organisation for Economic Co-operation and Development’s Crypto-Asset Reporting Framework in Canada, with attendant adjustments to the Common Reporting Standard, as announced in Budget 2024.
• Provide the Canada Revenue Agency with enhanced audit powers to more easily obtain information, including through a new penalty for non-compliance, as announced in Budget 2024.
• Provide an exemption from the excessive interest and financing expenses limitation (EIFEL) rules for debt used to fund the acquisition, construction or conversion of purpose-built residential rental buildings, as announced in Budget 2024.
• Provide an exemption from the EIFEL rules for debt used to fund a regulated energy utility business carried on in Canada, as announced on August 12, 2024.
• Implement the remaining portion of the substantive Canadian-controlled private corporations measure relating to the passive income of foreign affiliates, as proposed in Budget 2022.
• Introduce routine technical amendments to ensure Canada’s tax laws align with their underlying policy objectives.

Details on all the above draft legislative proposals can be found under Related documents below.

The government invites all interested Canadians and stakeholders to provide feedback on these draft legislative proposals by emailing their comments to consultation-legislation@fin.gc.ca by September 12, 2025. References to “Announcement Date” in all draft proposals and explanatory notes refer to today’s release date.

The Department of Finance also today posted draft legislative proposals to amend the Goods and Services Tax/Harmonized Sales Tax rules in the Excise Tax Act to allow input tax credits for redeemed coupons to be available only for payments made exclusively in the course of commercial activities, in response to a recent Federal Court of Appeal decision. This proposed amendment would apply effective August 16, 2025 and in respect of any input tax credits for payments made not already claimed in a return filed on or prior to August 15, 2025.

Guidance on other previously announced measures will follow at a later date.