Canada

Canada's individual tax summary reflects all 2025 provincial and territorial budgets. The newly re-elected federal minority government is expected to table a 2025 budget in autumn 2025. The 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.

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 the portion of capital gains realised by individuals after 31 December 2025 (previously 24 June 2024) that exceeds an annual 250,000 Canadian dollars (CAD) threshold. See Capital gains in the Income determination section and our Tax Insights 'Finance releases draft legislation to increase the capital gains inclusion rate' (27 March 2025 update) at www.pwc.com/ca/taxinsights for more information.

Canadian Entrepreneurs' Incentive

Draft legislative proposals introduce the Canadian Entrepreneurs' Incentive, which will reduce the taxes on capital gains from the disposition of certain shares of a small business corporation owned directly by an eligible individual. See Canadian Entrepreneurs' Incentive in the Income determination section for more information.

Federal personal income tax rate

The newly re-elected minority federal government proposes to reduce the lowest marginal personal income tax rate from 15% to 14%, effective 1 July 2025. See Personal income tax rates in the Taxes on personal income section for more information.

Alternative minimum tax for high-income individuals

For taxation years that begin after 2023, recently enacted legislation increases the alternative minimum tax rate and exemption and broaden its calculation base. See Alternative Minimum Tax (AMT) in the Taxes on personal income section and our Tax Insights ‘Changes to the alternative minimum tax are enacted: How will it affect individuals and trusts starting 2024?' at www.pwc.com/ca/taxinsights for more information.

Reporting requirements for trusts

Draft legislative proposals (i) reduce the number of trusts, including bare trust arrangements, that would need to file a trust return (and report certain additional information), and (ii) defer the start of the revised bare trust filing requirement until the 2025 taxation year. See Reporting requirements for trusts in the Other issues section and our Tax Insights 'Finance proposes to reduce the scope of the enhanced trust reporting rules' (1 November 2024 update) at www.pwc.com/ca/taxinsights for more information.