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2025 federal budget: Personal tax measures

Updated: November 04, 2025

Budget 2025 introduces a series of significant personal tax measures aimed at modernizing compliance rules and providing targeted relief to Canadians. From deferred bare trust reporting requirements to expanded anti-avoidance provisions for trust transfers, the changes reflect a continued focus on transparency and fairness in the tax system. The budget also clarifies qualified investment rules for registered accounts, proposes new credits—including a top-up for middle-income earners—and introduces a temporary tax credit for personal support workers. Here’s a convenient breakdown of these updates and how they could impact you.

Bare Trust reporting

The 2025 budget announced that the technical amendments related to deferred application of the Bare Trust reporting rules would now apply for taxation years ending on or after December 31, 2026.

Trust to Trust transfers

Budget 2025 proposes an expansion of current anti-avoidance rules as they relate to Trust to Trust transfers that attempt to avoid the application of the 21 year deemed disposition rules. This aligns with the other changes regarding Notifiable Transactions for such transactions.

Qualified Investments in Registered Accounts

Currently the Income Tax Act has a number of different definitions and qualifications that relate to certain types of assets held in the various types of tax registered accounts. The budget looks to clarify the rules between accounts as well as modify what types of investments in small businesses may be held in these types of tax accounts.

Top Up Credit

During the summer of 2025, the government announced the Middle Class Tax Cut that is still currently before Parliament but expected to be partially effective for 2025. The budget announced technical amendments to offer certain individuals an additional tax credit when their circumstances would otherwise result in them not obtaining the benefit of the proposed tax cut.

Personal Support Workers Tax Credit

As pre-announced in the last several weeks, the budget proposes to introduce a temporary Personal Support Workers Tax Credit, which would provide eligible personal support workers working for eligible health care providers with a refundable tax credit of 5% of eligible earnings, providing a credit value of up to $1,100.

Rachel Gervais
Managing Partner, Tax
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Harry Chana
Partner, International & Cross Border Tax Services Leader
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Greg London
Partner, Domestic Tax Consulting Leader
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The information in this publication is current as of November 4, 2025

This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.