2025 Budget: What SMEs & New Canadians Must Know

The federal government of Canada introduced its 2025 Budget on November 4 2025, bringing in a range of tax changes that matter especially for small and medium-sized enterprises (SMEs) and immigrants/new Canadians. For business owners, self-employed individuals, and immigrants establishing themselves in Canada, understanding these changes early helps protect your bottom line and avoid surprises.

Key Take-aways for SMEs

1. Immediate expensing (“Productivity Super-Deduction”)
   The Budget expands rules so eligible capital investments (machinery, processing buildings) may qualify for 100% deduction in the first year, lowering costs of growth and equipment upgrades.
   What it means for you: If you run a coffee shop, small manufacturing, auto shop, or other business with equipment needs—this can significantly improve cash‐flow and tax planning.

2. GST/HST & data‐sharing changes
   New proposals give Canada Revenue Agency (CRA) more authority to share taxpayer information with Employment and Social Development Canada (ESDC) to enforce worker classification rules (employee vs contractor).
   What to check: If you hire workers, contractors or part-timers, ensure your classification, payroll and remittances are compliant.

3. Elimination of Underused Housing Tax (UHT)
   The UHT—a 1% annual tax on certain vacant or under-used residential properties—will be eliminated for calendar year 2025 and onward (though prior years still apply).
   Why SME owners care: If you invest in property, hold multiple residential properties, or have mixed business/property structures, the change reduces a tax burden and simplifies planning.

Why These Changes Matter for New Canadians & Immigrants

• Tax-rate changes: The Budget includes a reduction of the lowest marginal federal personal tax rate (from 15% to 14% for 2026 and onward) and introduces adjustments to tax credits.

• Integration into business economy: With immigration targets set high and emphasis on economic migrants, many newcomers are starting businesses or bringing skills into Canada. The SME incentives above help.

• Avoiding common pitfalls: Newcomers often mix personal and business finances, misunderstand worker classification, or lack systems for regulatory compliance. With the new data-sharing enforcement and expanded capital deduction rules, it’s more important than ever to get accounting foundations right.

Action Checklist for You

• Review any planned purchases of equipment—can you qualify for immediate expensing?

• Check your workforce: Are you properly classifying workers? Is payroll up to date?

• If you hold a rental or residential property in Canada and have been subject to UHT filings, confirm status and obligations for 2022-24 and plan for change in 2025.

• For newcomers: ensure you separate personal vs business financials, maintain records, and register your business structure appropriately (sole proprietor vs corporation).

• Use professional support early: mistakes made now can lead to CRA audits or lost deductions down the road.

Final Thoughts

The 2025 Budget offers a mix of opportunities and enforcement risks. For SMEs and immigrants in Canada, the incentives around equipment spending and business investment are promising—but so too is the risk of non-compliance in areas such as workforce classification and personal/business tax separation.

At Pantax Accounting, we specialise in working with small business owners, immigrants, and founders in the Toronto area to ensure strong tax-compliance and optimised planning. If you’d like to review how the 2025 tax changes may affect your business or personal situation, we’re here to help.

Disclaimer

This blog post is provided for general information purposes only and does not constitute tax, legal, or financial advice. The information contained herein may not apply to every individual or business situation, and tax laws are subject to change. Readers should not act or rely solely on the content of this article without seeking professional advice tailored to their specific circumstances. Pantax Accounting Inc. is not responsible for any errors, omissions, or actions taken based on the information provided in this publication.