Updated: March 28, 2025
Despite Parliament being prorogued and subsequently dissolved, the CRA has confirmed that it will continue to administer the proposed increase to the lifetime capital gains exemption to $1.25 million retroactively, effective June 25, 2024.
On January 6, 2025, Prime Minister Justin Trudeau announced his resignation as Liberal Party leader, effective upon the appointment of a successor. In light of this, Governor General Mary Simon granted his request to prorogue Parliament until March 24, 2025.
Mark Carney was sworn in as the new Prime Minister and Trudeau resigned on March 14, 2025. On March 23, Carney requested—and was granted—the dissolution of parliament, triggering a federal election set for April 28, 2025.
The prorogation and subsequent dissolution of Parliament puts the House of Commons on hold as Canada heads into the next federal election. 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.
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
The CRA has confirmed that it will continue to administer the changes proposed to the lifetime capital gains inclusion rate to $1,250,000 (from $1,044,291) even though Parliament was prorogued and has since been dissolved to allow for a federal election. There is uncertainty whether the lifetime capital gains exemption will remain at $1.25 million post-election as this was never brought into law, despite the CRA’s administrative position. This is because the CRA has a standard practice of administering certain changes to tax legislation once a Notice of Ways and Means Motion has been tabled.
Despite Parliament being prorogued, 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 this proposed legislation.
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.
