Tax Insights: Bill C-15 implements SR&ED, capital cost allowance and transfer pricing changes and more

Issue 2025-43

In brief

What happened? 

On November 18, 2025, the federal government tabled Bill C-15, An Act to implement certain provisions of the budget tabled in Parliament on November 4, 2025. Key tax measures in Bill C-15:

• significantly enhance the scientific research and experimental development (SR&ED) tax incentive program
• implement (or reinstate) various accelerated capital cost allowance (CCA) measures
• enhance (or introduce) various refundable investment tax credits (ITCs) for the clean economy
• change Canada’s transfer pricing rules
• raise the lifetime capital gains exemption to $1.25 million
• repeal the Digital Services Tax Act as of June 20, 2024 (the date of original enactment)

Why is it relevant?

Bill C-15 includes legislation to implement a variety of tax measures, the legislative progress for many of which has been long awaited by taxpayers and tax practitioners.

Actions to consider

Taxpayers should be aware of the tax changes contained in Bill C‑15, some of which represent significant Canadian tax policy changes. Discuss with your PwC adviser how these new measures might apply to you or your business and begin preparations to implement and account for them.

In detail

Legislation in Bill C-15

Noteworthy legislation in Bill C‑15 includes the following measures:

Business tax measures

• SR&ED tax incentive program – significantly enhancing the SR&ED tax incentive program by expanding SR&ED ITC refundability and restoring eligibility for capital expenditures, for taxation years that begin, and for property acquired, after December 15, 2024 (for more information, see our Tax Insights “SR&ED updates: Enhanced credits, expanded eligibility and emerging opportunities” (November 10, 2025 update) 
• Accelerated CCA – implementing (or reinstating) various accelerated CCA measures as follows:
  • the Accelerated Investment Incentive on eligible depreciable property and immediate expensing for eligible manufacturing and processing (M&P) and specified clean energy equipment and zero‑emission vehicles are reinstated, for qualifying property acquired after 2024 and that becomes available for use before 2030; the accelerated CCA is phased out for property that becomes available for use after 2029 and eliminated after 2033
  • an accelerated CCA of 10% for new eligible purpose‑built rental projects that begin construction after April 15, 2024 and before 2031, and are available for use before 2036
  • immediate expensing for CCA class 44 (patents), 46 (data network infrastructure equipment) and 50 (general‑purpose electronic data-processing equipment and systems software) property acquired after April 15, 2024 and that becomes available for use before 2027
• Eligible small business corporation (ESBC) shares – expanding what qualifies as an ESBC share and relaxing certain conditions for the rule on the capital gains rollover on business investment to apply, for qualifying dispositions that occur after December 31, 2024
• Employee ownership trusts (EOTs) and worker cooperatives – exempting the first $10 million in capital gains on the sale of a business to an EOT or a worker cooperative, for qualifying dispositions of shares that occur after 2023 and before 2027
• Critical mineral exploration tax credit (CMETC) – expanding the list of minerals eligible for the CMETC to include bismuth, cesium, chromium, fluorspar, germanium, indium, manganese, molybdenum, niobium, tantalum, tin and tungsten, effective for expenditures renounced under eligible flow‑through share agreements entered into after November 4, 2025 and before April 1, 2027
• Clean economy ITCs – enhancing (or introducing) various clean economy refundable ITCs:
  • carbon capture, utilization and storage – availability of full credit rates extended by five years to the end of 2035
  • clean technology – eligibility expanded so that it supports the generation of electricity and heat from waste biomass, for property acquired and available for use after November 20, 2023
  • clean technology manufacturing – eligibility expanded to investments in eligible polymetallic projects, retroactive to January 1, 2024, and to additional qualifying materials (i.e. key critical minerals [antinomy, gallium, germanium, indium, scandium]), for property that is acquired and becomes available for use after November 3, 2025
  • clean electricity – new refundable ITC available to qualifying corporations and trusts for investments in certain clean electricity property, effective April 16, 2024; the property must be in respect of projects that began construction after March 27, 2023
• Withholding for non-resident services providers – upon royal assent to the enacting legislation, allowing the Canada Revenue Agency (CRA) to waive the withholding requirement, over a specified period, for payments to a non-resident service provider (i.e. the Regulation 105 withholding requirement) if certain conditions specified in the legislation (and any other conditions that the Minister of National Revenue may specify) are met
• Synthetic equity arrangements (SEAs) – removing the tax-indifferent investor exception to the SEA anti‑avoidance rule, for dividends received after 2024
• Mutual fund corporations – precluding a corporation from qualifying as a mutual fund corporation when it is controlled by or for the benefit of a corporate group, for taxation years beginning after 2024

International tax measures

• Transfer pricing – significantly changing Canada’s transfer pricing rules for taxation years beginning after November 4, 2025 (for more information, see our Tax Insights “Bill C-15: Significant changes proposed to Canada’s transfer pricing rules”)
• Foreign accrual property income (FAPI) and Canadian‑controlled private corporations (CCPCs) – aligning the taxation of investment income of controlled foreign affiliates of CCPCs with the rules that currently apply to investment income earned directly by CCPCs; relief is provided by the introduction of a new component of FAPI, called “foreign accrual business income” (FABI) – the FABI rules generally apply to taxation years that begin after 2025, but can apply to earlier taxation years if certain elections are filed

Personal tax measures

• Lifetime capital gains exemption (LCGE) – increasing the LCGE from $1,016,836 to $1.25 million for dispositions resulting from eligible capital gains occurring after June 24, 2024 (to be indexed after 2025)
• Personal tax credits –
  • introducing a temporary non‑refundable Top‑up Tax Credit¹ for certain individuals for their 2025 to 2030 taxation years (in cases when the individual’s amounts eligible for non‑refundable tax credits in a taxation year exceed the first income tax bracket threshold)
  • implementing a temporary refundable Personal Support Workers Tax Credit for the 2026 to 2030 taxation years, equal to 5% of eligible earnings up to a maximum of $1,000 per year, and amending the Home Accessibility Tax Credit, effective the 2026 taxation year
  • extending the Mineral Exploration Tax Credit by two years to flow‑through share agreements entered into before April 1, 2027
• Trusts² – deferring the start date of the revised bare trust filing requirements so that they apply to taxation years ending after December 30, 2026, and reducing the number of trusts that are required to file a T3 Income Tax and Information Return (including Schedule 15), for taxation years ending after December 30, 2024

Other tax measures

• Digital services tax (DST) – retroactively repealing the Digital Services Tax Act (DSTA) and the Digital Services Tax Regulations as of June 20, 2024 (the date of the DSTA’s original enactment) and removing all references to the DSTA and its regulations from other federal statutes; DST payments already made to the CRA will be fully refunded with interest calculated at the prescribed rate from the date of payment to the date of refund
• Underused housing tax (UHT) – eliminating the UHT as of the 2025 calendar year; no UHT is payable and no UHT returns are required to be filed for 2025 and subsequent calendar years
• Luxury tax – amending the Select Luxury Items Tax Act to no longer impose the luxury tax on aircraft and vessels effective November 5, 2025
• Charitable donations – extending the deadline for making certain charitable donations eligible for tax support in the 2024 taxation year (for more information, see our Tax Insights “Deadline extended to February 28, 2025 for making charitable donations eligible for 2024 tax year relief”)

Previously announced technical measures

• Excessive interest and financing expenses limitation (EIFEL) regime – making various amendments including revising the determination of “adjusted taxable income,” effective for taxation years that end after August 15, 2025, and adding certain EIFEL elections to Income Tax Regulation 600 thereby permitting their late filing in accordance with the procedures of these provisions
• Hybrid mismatch arrangements – narrowing the scope of the FAPI inclusion for inter‑affiliate dividends that are deductible to the dividend payer under foreign tax law
• Foreign affiliate reorganizations – tightening the “suppression election” for certain foreign affiliate wind‑ups, and narrowing the scope of rollover rules for certain foreign affiliate share for share exchanges and their “foreign merger” equivalent
• Cross‑border anti‑surplus stripping rules – providing relief for certain graduated rate estates
• Dispositions by a deceased individual’s legal representative – extending the capital loss carry back period for graduated rate estates to three taxation years for deaths occurring after August 11, 2024
• Non-resident withholding tax – providing an exception from the withholding requirement of an individual in respect of rent paid to a non‑resident in respect of the individual’s residence
• Alternative minimum tax – limiting the investment counselling fees deduction to 50% for years beginning after 2023

Legislation absent from Bill C-15

Noteworthy legislation (or previously announced measures) that are absent from Bill C‑15 include those relating to:

• the 2025 federal budget measure that allows immediate expensing for eligible M&P buildings (including eligible additions or alterations) in Canada acquired after November 3, 2025 and is first used for M&P before 2030; the immediate expensing is then phased out after 2029 and eliminated after 2033*
• the CRA that strengthens the CRA’s compliance and enforcement powers³ under the Income Tax Act (ITA) and related statutes
• the EIFEL regime that provides certain elective exemptions from the EIFEL regime for:
  • interest and financing expenses relating to purpose‑built rental housing
  • regulated energy utility businesses in Canada
• the Global Minimum Tax Act (GMTA)⁴ that amends the GMTA to:
  • include provisions for the Undertaxed Profits Rules (UTPR)
  • introduce a de‑consolidation rule in respect of multinational enterprise groups when there is a private Canadian corporation that holds controlling interests in one or more public Canadian corporations
  • integrate it with the foreign affiliate regime and the foreign tax credit rules in the ITA
• the second package* of the hybrid mismatch arrangement rules that were announced in the 2021 federal budget, which implements the recommendations of the Organisation for Economic Co‑operation and Development (OECD) BEPS Action Plan to eliminate the tax benefits arising from hybrid mismatch arrangements; the first package of these rules was enacted on June 20, 2024⁵
• the 2025 federal budget measure that suspends the dividend refund regime to prevent tax deferral through tiered corporate structures

^{* At the publication date, the Department of Finance has not yet released draft legislative proposals on these measures.}

The takeaway

The legislation in Bill C‑15 covers a wide range of tax measures, including many technical amendments. Many of these tax measures have been long awaited by taxpayers, such as the SR&ED, accelerated CCA and clean economy ITC measures, as well as repealing the DSTA. With only a few weeks remaining before Parliament adjourns for the winter break, it is unclear whether Bill C‑15 will be enacted in 2025 or early 2026. Nevertheless, it is advisable that taxpayers learn about these changes, determine whether any could apply (or benefit) them and start preparing for their implementation.