Budget 2025 Implementation Act, No. 2

Bill C-31, the Budget 2025 Implementation Act No. 2, is a large omnibus bill that implements many federal budget measures. Here is a plain-language summary.

The bill makes wide-ranging changes to how income tax, GST/HST and excise taxes are administered and calculated. For businesses, it introduces temporary immediate tax write-offs for new manufacturing and processing buildings, expands a clean hydrogen tax credit to cover a new production method (methane pyrolysis), tightens rules to stop wealthy families and corporations from using trusts, tiered corporate structures and other techniques to defer or avoid tax, and gives the Canada Revenue Agency stronger tools to demand information during audits and penalize people who refuse to cooperate. It also updates Canada's rules for taxing large multinational corporations to align with the global 15% minimum tax framework, and implements new international reporting requirements for crypto-asset transactions so tax authorities can track crypto holdings the way they already track bank accounts.

For individuals, the bill automates delivery of certain federal benefits for lower-income Canadians so they don't need to file complicated paperwork to receive money they're owed. It ends Canada Carbon Rebate payments for late tax filings after October 2026, and it makes numerous technical fixes to rules on savings plans (RRSPs, RESPs, TFSAs, first home savings accounts, disability savings plans), pensions, and charities. It also suspends Canada's tax treaty with Russia and raises the dollar thresholds for using the Tax Court's simpler, faster appeal process.

Beyond taxation, the bill touches many unrelated areas of federal law. It bans financial institutions from issuing untraceable "bearer" securities and shields regulators from lawsuits for good-faith actions. It requires banks to offer deposit products without discrimination. It creates a new federal agency, the Defence Investment Agency, to handle defence-related purchasing and investment, and gives the government expanded powers to fast-track military and security procurement, including bypassing normal competitive bidding in specified circumstances. It also bans most non-compete clauses in federally regulated employment, reduces the size of the Canadian Human Rights Commission and the International Development Research Centre's governing boards, changes how often certain product safety reviews occur (tobacco/vaping and pesticides), and shifts responsibility for resolving air travel complaints from the Canadian Transportation Agency to the Minister of Transport (potentially through outside third parties), while raising the penalties airlines face for violations. Finally, it gives the federal cabinet new powers to cancel mining claims and licences in Nunavut where doing so is judged to be in the national interest, with a compensation process for affected claim holders.

This bill would create and amend a range of federal laws touching tax administration, financial-institution rules, defence procurement, air-passenger complaint handling, and several other government programs.

• Tax administration and information-gathering — the Canada Revenue Agency gains powers to demand information/documents from taxpayers and third parties without a court order in most cases, issue "notices of non-compliance" carrying penalties up to $25,000, seek compliance orders carrying penalties equal to 10% of tax payable, and share taxpayer data with foreign tax authorities under international agreements; taxpayers bear the burden of proving privilege claims are reasonable.
• Automatic tax filing — the Minister may unilaterally file a tax return on behalf of an individual who hasn't filed, using third-party information, deeming it filed by the person; the person has 90 days to contest the pre-filled information before it takes effect.
• New Crypto-Asset Reporting Framework — crypto-asset service providers must collect user identity/residency data and report transaction details annually to the CRA, with penalties up to $500 per missing TIN and civil penalties for non-compliant users.
• Defence Investment Agency — creates a new federal agency, headed by a Governor-in-Council-appointed CEO, empowered to enter contracts, make loans, guarantees, grants and equity investments (up to $1 billion outstanding from the Consolidated Revenue Fund), and to bypass competitive bidding for a broad list of discretionary reasons (urgent need, national security, "supporting a sector of the Canadian economy," sole-source situations, etc.); the responsible Minister may also exclude bidders without giving reasons.
• Air passenger complaints — shifts authority to resolve airline complaints from the Canadian Transportation Agency to the Minister of Transport (or private third parties the Minister designates/contracts with), removes mandatory confidentiality protections for complaint proceedings, and raises maximum administrative penalties for corporate violations of the Act to $1,000,000 per violation.
• Non-compete clauses — voids non-compete and other specified employment restrictions for federally regulated employees, with exemptions for business sales, CEOs, and certain senior executives; enforcement and penalties run through existing Canada Labour Code complaint mechanisms.
• Other institutional changes — eliminates the Deputy Chief Commissioner position at the Canadian Human Rights Commission (converting the incumbent to Chief Commissioner), reduces the International Development Research Centre's Board of Governors from 14 to 12 members, extends Tobacco and Vaping Products Act reviews from two years to five, and replaces mandatory pesticide re-evaluation with a discretionary trigger based on the Minister's risk assessment.
• Financial institution rules — bans banks, trust companies and insurers from issuing new bearer (unregistered, anonymous) financial instruments, grants immunity from lawsuits to the Crown and financial regulators for good-faith acts under these Acts, and requires banks to offer/sell deposit products without discrimination, with the definition of "non-discriminatory" left to future ministerial regulation.