What you need to know about the 2025 Federal Budget

On November 4, 2025, Minister of Finance and National Revenue François-Philippe Champagne released Canada’s 2025 budget and fiscal plan, the first budget in 18 months and the first budget under Prime Minister Mark Carney. 

The Budget appeared to be a marked shift towards the new government’s priorities with a clear focus on defence and security, infrastructure, and measures to spur private sector investment. These priorities are set against the backdrop of a faltering Canadian economy, significant business uncertainty, and large increases to the deficit and debt. 

Budget 2025 is indeed big on new spending. It’s also big on deficit, showing a sizeable $78 billion deficit this year, representing 2.5% of GDP – almost double the previous projection of $38 billion. Spending is set to significantly increase in the short-term even while savings of $56 billion are booked over five years as a 10% or 40,000 decrease in public sector workers is planned.

A substantial portion of the increased spending comes in four buckets: Build Communities Strong Fund worth over $50 billion in new infrastructure spending, a Productivity Super Deduction to allow the full expensing of capital and research, Build Canada Homes, and the Defence spending.

There are also myriad initiatives that would have received significant attention if not for the wide-ranging scope of the budget – including $1 billion for AI infrastructure, a new Talent Attraction Strategy for international research, more money and new financing powers for the Major Projects Office, and much more. 

Overall, the budget spends big, while promising that these government-led investments will lead to private sector investments and future growth. 

Below, we provide a high-level overview of how Budget 2025 will impact the business community in Vancouver and the British Columbian economy: 

Productivity Super-Deduction

• Budget 2025 includes a “Productivity Super-Deduction" – a set of enhanced tax incentives covering all new capital investment that allows businesses to write off a larger share of the cost of these investments right away. Under this measure, businesses can recover their investment costs faster through the tax system. This makes it more attractive to invest in machinery, equipment, technology, and other productivity-enhancing assets and improves Canada’s competitiveness for attracting investment.

• Budget 2025 also includes all previously announced measures that would allow businesses to write off the cost of their investments more quickly: 

Defence

• The 2025 Budget proposes $81.8 billion on a cash basis over five years in defence spending, including $30 billion on defence-related capital spending over 5 years. 

• It also proposes a new Defence Investment Agency and Defence Industrial Strategy, and additional infrastructure funding for communities to help rebuild our economy and security.

Natural Resource Sector

• Creation of the Critical Minerals Sovereign Fund: Budget 2025 proposes $2 billion over five years, on a cash basis, starting in 2026-27, to Natural Resources Canada to create the Critical Minerals Sovereign Fund. The fund will make strategic investments in critical minerals projects and companies, including equity investments, loan guarantees, and offtake agreements. This proposal includes $50 million over five years, starting in 2026-27, to Natural Resources Canada to support the delivery of this fund. 
  

• Forestry: Budget 2025 proposes up to $700 million over two years in loan guarantees administered by the BDC, and $500 million over three years to renew and expand NRC’s forestry programs on market and product diversification.   
  

• B.C. Projects Remain on the Major Projects List: LNG Canada Phase 2 in Kitimat, B.C. and Red Chris Mine expansion, in Northwest B.C. are included on the federal major projects list in Budget 2025. In addition, B.C.’s Golden Triangle is cited under the Critical Minerals Strategy. A priority for the Major Projects Office will be to help more critical minerals projects get to final investment decisions within a two-year window. 
  

• Canadian Energy Regulator Act Amendments: Budget 2025 proposes legislative amendments to the Canadian Energy Regulator Act to enable longer licensing timeframes for liquid natural gas exports - these amendments may benefit workers in the energy and construction sectors in British Columbia, as longer licensing timeframes for liquid natural gas (LNG) projects could lead to further economic activity, including job opportunities. 

One Canadian Economy & Trade

• Buy Canadian Policy: Budget 2025 continues the Buy Canadian Policy, creating high-paying careers and supporting Canadian industries such as steel, aluminum, critical minerals, and softwood lumber, proposing $98.2 million over five years, starting in 2026-27, to support the implementation of the new Buy Canadian Policy. 
  

• Trade Diversification Strategy: Budget 2025 proposes $5 billion over seven years to Transport Canada to the New Trade Diversification Corridors Fund (including the establishment of a New Strategic Exports Office). 
  

• Strategic Response Fund: Budget 2025 proposes $5 billion over six years to a new program to help firms in all sectors and regions impacted by tariffs to adapt, diversify, and grow (which includes $1 billion specifically for the steel industry). 
  

• SME Export Readiness (ISED): Budget 2025 proposes $46.5 million over four years, starting in 2026-2027, to Innovation, Science and Economic Development Canada for the SME Export Readiness Initiative to support training for SMEs with limited exporting experience to build capacity to make informed, strategic decisions as they diversify trade. This will help Canadian firms access and be successful in new international markets and increase economic resilience. Budget 2025 also proposes $7.6 million over four years for the Innovation Partnership Program and Canadian Technology Accelerator. 
  

Talent and Labour

• International Talent Attraction Strategy and Action Plan: Budget 2025 proposes up to $1.7B to attract high-quality talent and researchers. 
  

• Job Search Tool and Online Training Platform: Budget 2026 proposes $50 million over 5 years (and 8 million ongoing) towards a job search tool and online training platform. 
  

Housing & Infrastructure Measures

• Build Canada Homes: Budget 2025 announced investments of $13 billion over 5 years, with a goal to double the pace of housing construction over the next decade while creating a new industry using Canadian technology, Canadian workers, and Canadian lumber. 
  

• The Build Communities Strong Fund: A 10-year, $50-billion fund for local infrastructure, including housing, transportation and a specific stream for health infrastructure such as hospitals and emergency services. This fund includes a Provincial and Territorial Stream that will provide $17.2 billion over 10 years, starting in 2026-27, to support provincial and territorial infrastructure projects and priorities. Funding will support housing enabling infrastructure (e.g., roads, water/wastewater), health-related infrastructure (e.g., hospitals), and infrastructure at colleges and universities. Of the above amount, $5 billion over three years, starting in 2026-27, will be dedicated to a Health Infrastructure Fund. 
  

• Transportation Infrastructure: Budget 2025 proposes to invest $6 billion in Canadian transportation infrastructure, which could raise productivity and increase Canadian GDP by up to $21 billion.

Immigration 

• Budget 2025 announced the 2026-2028 Immigration Levels Plan. The Plan includes: 

• stabilizing permanent resident admission targets at 380,000 per year for three years, down from 395,000 in 2025;

• increasing the share of economic migrants from 59 per cent to 64 per cent; and

• reducing the target for new temporary resident admissions from 673,650 in 2025 to 385,000 in 2026, and 370,000 in 2027 and 2028. 

The Levels Plan includes one-time initiatives starting in 2026, such as the acceleration of permanent residence over the next two years for select skilled workers employed in specific in-demand sectors, with a particular focus on those working in rural areas.

The fiscal cost of this measure is $168.2 million over four years, starting in 2026-27, and $35.7 million ongoing. These costs primarily represent the net loss in fee revenue, driven by fewer temporary resident admissions. 

The government recognizes the role temporary foreign workers play in some sectors and regions and will consider industries and sectors impacted by tariffs and the unique needs of rural and remote communities.

These targets keep permanent resident arrivals at less than one per cent of the population beyond 2027 and will reduce the total number of temporary residents to less than five per cent of Canada’s population by the end of 2027. 

SME Supports

• Legislation to increase the Lifetime Capital Gains Exemption to $1.25 million. This is an important measure to help with small business succession plans. 
  

• Legislation to remove income taxes from the Canada Carbon Rebate (CCR) for Small Business and to extend the deadline will be introduced. $623 million in CCR payments for 2024/25 will be distributed before the end of the year. 
  

• A new Small and Medium Business Procurement Program to help Canadian small- and medium-sized enterprises access federal procurement opportunities.

• Budget 2025 includes proposed funding ($100 million) to support the hosting of the FIFA Men’s World Cup 2026 matches in Toronto and Vancouver.