Canada

Canada's corporate tax summary reflects all 2025 federal, provincial and territorial budgets. This summary is based on enacted and proposed legislation and assumes that the proposed legislation will become law. Generally, budget proposals and draft legislation are enacted into law, even with a minority federal government, which is currently the case.

Accelerated capital cost allowance (CCA)

Draft legislation re-instates the Accelerated Investment Incentive on eligible depreciable property and the immediate write-off for newly acquired manufacturing and processing (M&P) and specified clean energy equipment and zero-emission vehicles; and the 2025 federal budget proposes to provide immediate expensing for the cost of eligible M&P buildings.

See Accelerated capital cost allowance in the Deductions section and our Tax Insights:

• '2024 Federal Fall Economic Statement: Tax highlights'
• ‘2025 Federal budget: Investing in Canada’s future’

at www.pwc.com/ca/taxinsights for more information.

Scientific research and experimental development (SR&ED)

Draft legislation significantly enhances the SR&ED program by expanding SR&ED investment tax credit (ITC) refundability to Canadian public corporations, restoring eligibility for capital expenditures, and increasing the annual SR&ED expenditure limit, under which certain corporations are entitled to earn an enhanced 35% refundable ITC. See Scientific research and experimental development (SR&ED) credit in the  Tax credits and incentives section, and our Tax Insights ‘SR&ED updates: Enhanced credits, expanded eligibility and emerging opportunities’ (November 10, 2025 update) at www.pwc.com/ca/taxinsights for more information.

'Clean economy' ITCs

The 2022, 2023, 2024 and 2025 federal budgets introduced and enhanced multiple 'clean economy' refundable ITCs for: carbon capture, utilisation, and storage (CCUS); clean technology; clean hydrogen; clean technology manufacturing (which includes electric vehicle supply chain investment); and clean electricity generation. Applications are now being accepted for ITCs for CCUS, clean technology, clean hydrogen, and clean technology manufacturing. Draft legislation introduces the ITC for clean electricity generation, and the 2024 Federal Fall Economic Statement provided the design and implementation details for the electric vehicle supply chain ITC. See Federal environmental incentives in the Tax credits and incentives section and our Tax Insights:

• 'Clean economy investment tax credits (August 2024 update)'
• 'Finance releases draft legislation for the clean hydrogen and clean technology manufacturing investment tax credits' (5 June 2024 update)
• ‘2024 Federal Fall Economic Statement: Tax Highlights’
• '2025 Federal budget; Investing in Canada's future'

at www.pwc.com/ca/taxinsights for more information.

Capital gains inclusion rate

The federal government has cancelled draft legislative proposals that would have increased the capital gains inclusion rate, from one half to two thirds, for dispositions after 24 June 2024. See Capital gains in the Income determination section for more information.

Transfer pricing

Draft legislation implements significant changes to Canada’s transfer pricing rules. See Transfer pricing in the Group taxation section and our Tax Insights ‘Bill C-15: Significant changes proposed to Canada's transfer pricing rules' at www.pwc.com/ca/taxinsights for more information.

Global minimum tax and the new international tax framework

138 countries, including Canada, have committed to fundamental changes to the international corporate tax system that support the Organisation for Economic Co-operation and Development (OECD) Inclusive Framework's 'Tax Challenges Arising from Digitalisation' project. The changes would provide new taxing rights that:

• reallocate some portion of the profits of large multinational enterprises (MNEs) to countries where the MNE's customers are located (Pillar One), and
• adopt a global minimum effective tax rate of 15% (Pillar Two).

Pillar Two has been implemented in Canada, through the Global Minimum Tax Act (GMTA), generally effective for fiscal years of MNEs that begin after 30 December 2023; draft legislative proposals implement a backstop charging rule that will come into effect for fiscal years of MNEs that begin after 30 December 2024; and draft legislative proposals integrate the Income Tax Act’s foreign affiliate regime and foreign tax credit rules with the GMTA.

The multilateral convention to implement Pillar One has been delayed, and the federal government enacted legislation in June 2024 to implement a Digital Services Tax (DST) in Canada (to retroactively apply to Canadian digital services revenue earned since 1 January 2022). The government then announced on 29 June 2025 that the DST would be repealed, one day before the first scheduled DST payment deadline. See Global minimum tax and the new international tax framework in the Taxes on corporate income section and our Tax Insights:

• 'Canada releases Global Minimum Tax Act' (21 June 2024 update)
• 'Finance releases draft legislation to implement the undertaxed profits rule'
• ‘Finance releases draft legislation to amend the Pillar Two rules and integrate the foreign affiliate regime with Pillar Two,’ and 
• 'Canada intends to rescind its Digital Services Tax Act' (2 July 2025 update)

at www.pwc.com/ca/taxinsights for more information.

Digital services tax (DST)

A digital services tax was to have been imposed in Canada if a multilateral convention implementing Pillar One (see Global minimum tax and the new international tax framework above) had not come into force by the end of 2023. Since a multinational convention has not been signed, Canada implemented a DST to apply effective the 2024 calendar year, retroactively in respect of in-scope revenues earned since 1 January 2022. However, on 29 June 2025, the Department of Finance announced the DST’s recission and halted the scheduled 30 June 2025 collection of the DST. Draft legislation repeals the Digital Services Tax Act, retroactive to the date of its original enactment. See Digital services tax (DST) in the Other taxes section and our Tax Insights 'Canada intends to rescind its Digital Services Tax Act' (2 July 2025 update) at www.pwc.com/ca/taxinsights for more information.

Voluntary Disclosures Program (VDP)

The CRA has revised its VDP for applications submitted after 30 September 2025. The changes simplify and allow greater access to, and enhance the benefit relief that may be obtained from, the VDP. See Voluntary Disclosures Program in the Tax administration section and our Tax Insights ‘The Canada Revenue Agency revises its Voluntary Disclosures Program effective October 1, 2025' at www.pwc.com/ca/taxinsights for more information.

Canada Border Services Agency (CBSA) Assessment and Revenue Management (CARM)

Canadian-resident and non-resident businesses that import goods into Canada and their trade chain partners that interact with the CBSA are required to participate in the CARM, which is now operational (the transition period for the Release Prior to Payment program ended on 19 May 2025; it was originally to end on 19 April 2025). See Canada Border Services Agency (CBSA) Assessment and Revenue Management (CARM) in the Other taxes section and our Tax Insights ‘Businesses importing goods into Canada must register for CARM – Action required! (October 2024 update)' at www.pwc.com/ca/taxinsights for more information.