Budget 2025 includes productivity super-deduction tax incentives and elimination of luxury tax on certain aircraft and vessels

On November 4, 2025, Canada’s Minister of Finance and National Revenue, François-Philippe Champagne, tabled the Liberal Government’s federal budget, Building Canada Strong, in the House of Commons (Budget 2025). Of interest for the retail industry and consumer products space, among other things, Budget 2025 proposes as part of a suite of enhanced tax incentives referred to as a “productivity super-deduction”, the reinstatement of the accelerated investment incentive creating an enhanced first-year write-off for most depreciable capital assets and  immediate expensing of the cost of certain manufacturing and processing buildings (including eligible additions and alterations).

In addition, Budget 2025 proposes to eliminate the luxury tax on subject aircraft and subject vessels under the Select Luxury Items Tax Act (SLITA) effective on the day after Budget Day. The tax on subject vehicles would remain in force. After filing a final return for the reporting period that includes Budget Day, filing returns for subject aircraft and subject vessels would no longer be required. Registrations in respect of subject aircraft and subject vessels may be maintained until February 1, 2028, which may help entitle certain registered vendors to tax rebates.

For a discussion of these tax measures and others in Budget 2025, please see McCarthy Tétrault’s 2025 Canadian Federal Budget Commentary – Tax Initiatives.