Updated: January 31, 2025
On January 6, 2025, Prime Minister Justin Trudeau announced he will officially resign as Liberal Party leader, once a new leader is appointed. In light of this, Governor General Mary Simon had granted his request to prorogue Parliament until March 24, 2025. Prorogation puts the House of Commons on hold as Canada heads into the next federal election.
For taxpayers, the prorogation of Parliament can create temporary uncertainty. Businesses and individuals could see a different result from the tax planning they’ve implemented or face uncertainty in making future plans based on proposed tax legislation.
Since then, there have been updates to some of the measures impacted by the prorogation. The federal government has announced it’s deferring the proposed increase to the capital gains inclusion rate to January 1, 2026 (from June 25, 2024). The deadline for 2024 charitable donations was also extended to February 28, 2025, where certain criteria are met.
Prorogation of Parliament signals the formal end of a parliamentary session. This action halts parliamentary business, clearing the legislative agenda. All bills that haven’t received Royal Assent are terminated and must be reintroduced in the new session, or risk being abandoned.
This development could impact outstanding tax legislation and potentially affect the timing of the 2025 federal budget. Although the next Canadian federal election is scheduled for no later than October 20, 2025, it could be called earlier by the government or triggered by a successful motion of non-confidence once prorogation ends.
There are many proposed measures that could be impacted by the prorogation, including (but not limited to):
• 2024 Fall Economic Statement proposals, such as changes to the scientific research and experimental development (SR&ED) incentive, accelerated investment incentive, and immediate expensing rules
• The broadening of T3 Schedule 15 filing exemptions for trusts
• The addition of an undertaxed profits rule to the Global Minimum Tax Act
• Amendments to the GST/HST rules regarding joint ventures
On January 31, 2025, the federal government announced that it’s deferring the effective date for the proposed capital gains inclusion rate increase to 66.67% (from 50%) to January 1, 2026 (from June 25, 2024). The CRA has also confirmed that it will administer the currently enacted inclusion rate of 50% for capital gains realized before January 1, 2026.
Despite Parliament prorogation, the Department of Finance has issued proposed legislation to extend the deadline for 2024 charitable donations to February 28, 2025, where certain criteria are met. The CRA has confirmed that it plans to administer the proposed extension.
It’s unclear whether the proposal to remove the 2024 bare trust filing requirements will be enacted, due to the prorogation of Parliament.
However, the CRA has reconfirmed that 2024 bare trust returns aren’t required, unless specifically requested. This extension of their similar policy for 2023 bare trust returns is intended to give bare trustees more time to prepare for the new trust reporting rules.
We’ll continue to monitor the status of these proposed measures and provide updates on our Insights page and LinkedIn. If you have any questions about how your business may be impacted by these changes, our experienced tax professionals can help. Contact your local advisor or reach out to us here.
The information contained herein is general in nature and is based on proposals that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice or an opinion provided by Doane Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, specific circumstances or needs and may require consideration of other factors not described herein.
