Governance Insights 2025 A Preview of 2025: 10 Legal Updates GCs, Boards and Investors Need to Know
Reports are publicly available, however, meaning that the weight of public scrutiny may propel disclosure and the development of industry practices forward. For more on this topic, refer to Canada’s Anti- Slavery Regime (pg. 15).
10. Canada Tax Policy: Expect a Change of Course Although the federal government has introduced considerable tax legislation in recent years, national and international political developments leave the future of some of the most noteworthy proposals in doubt. Canadian companies should be prepared for significant changes in the Canadian tax landscape in 2025. Arguably the most significant development in 2024 was the federal government’s spring budget proposal to increase the capital gains income inclusion rate to two-thirds, from one-half (effectively imposing a one-third increase in the tax on capital gains). The proposal spurred intense activity, with many taxpayers taking steps to trigger gains before June 25, 2024, the scheduled effective date for the change. However, the legislation has not yet been made law and, with a federal election imminent and the Conservative Party’s publicized opposition to the change, it is possible that the proposal will never come into effect. The Canada Revenue Agency, consistent with its normal practice, is currently applying the proposed changes as though they were in effect, but taxpayers should carefully consider how capital gains are reported in light of the uncertainty regarding the proposed amendment to the inclusion rate. The federal government also recently introduced two new taxes, each operating outside the income tax regime: the Global Minimum Tax (GMT) and the Digital Services Tax (DST). The GMT is part of an international effort to impose a 15% minimum corporate tax on large multinational groups, and the DST imposes a tax on revenues generated from the provision of certain online services to Canadian residents. Although these changes are now largely in force, they have faced fierce opposition and provoked retaliatory threats from the United States. In light of the anticipated reopening of trade negotiations with the incoming U.S. administration, it is possible that these new taxes will be repealed or significantly curtailed in 2025.
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