Government of Canada Tables Motion to Cut Costs

A Three-Pronged Approach to Lower Costs

1. Middle-Class Tax Cut: Up to $840 in Savings for Families

• Savings: Individuals can save up to $420 per year, while couples could save up to $840 in 2026. For 2025, the half-year implementation results in a 14.5% tax rate, delivering up to $210 per person.
• Who Benefits: The bulk of the relief targets those in the two lowest tax brackets (incomes up to approximately $114,750), with nearly half going to those earning $57,375 or less. A Gender-Based Analysis Plus (GBA Plus) confirms the measure is balanced, with 52% of beneficiaries being men and 48% being women.
• Implementation: The Canada Revenue Agency (CRA) will update source deduction tables by July 1, 2025, so employers can reduce tax withholdings, putting more money in paycheques. Those without source deductions (e.g., self-employed) will see savings when filing their 2025 tax return in spring 2026.

2. GST Relief for First-Time Home Buyers: Up to $50,000 in Savings

• Full GST Relief: New homes valued up to $1 million are eligible for a 100% GST rebate, saving first-time buyers up to $50,000.
• Partial GST Relief: For homes valued between $1 million and $1.5 million, the rebate phases out linearly (e.g., a $1.25 million home gets a 50% rebate, up to $25,000).
• Eligibility:
  • Be at least 18 years old, a Canadian citizen or permanent resident, and not have owned and lived in a home in the current or four prior calendar years (you or your spouse/common-law partner).
  • Applies to new homes bought from a builder, owner-built homes, or co-op housing shares, used as your primary residence.
• Timing: Purchase or construction agreements must be signed on or after May 27, 2025, and before 2031, with construction starting before 2031 and substantially completed by 2036.
• Limitations: The rebate is a one-time claim, and you’re ineligible if your spouse/common-law partner has already claimed it. Agreements signed before May 27, 2025, are not eligible, even if reassigned.

• Details:
  • The repeal will occur in four phases, starting with retroactively repealing most charging provisions on April 1, 2025, followed by rebate provisions by October 1, 2025, registration provisions by November 1, 2025, and remaining provisions by April 1, 2035, for administrative continuity.
  • A final Canada Carbon Rebate payment for April 2025 (up to $456 for a family of four, plus a 20% rural top-up) will be issued, requiring a 2024 tax return filing.
  • Eligible Indigenous governments will receive $531.5 million in fuel charge proceeds for 2020-25, and farmers in designated provinces (e.g., Alberta, Ontario) will receive a final Fuel Charge Proceeds to Farmers Tax Credit for 2024-25.
• Impact: This change is expected to lower costs at the gas pump and for heating, as seen after the initial suspension of the fuel charge.

Why This Motion Matters – Government of Canada

• Economic Relief: The middle-class tax cut delivers $27 billion in savings, boosting disposable income for millions.
• Housing Affordability: The FTHB GST Rebate provides up to $3.9 billion in savings, helping young Canadians enter the housing market and spurring construction.
• Lower Fuel Costs: Removing the consumer carbon price reduces expenses for transportation and heating, directly impacting household budgets.

How to Benefit from These Measures

1. Middle-Class Tax Cut:
   • Paycheque Savings: Starting July 1, 2025, check your paystubs to ensure your employer has applied the updated 14% tax rate. Contact your payroll department or the CRA if issues arise.
   • Tax Returns: If self-employed or without source deductions, file your 2025 tax return by April 30, 2026 (or June 15, 2026, for self-employed) to claim the savings.
   • Tip: Use the extra $420 (or $840 for couples) to pay down debt, save for a home, or cover essentials.
2. FTHB GST Rebate:
   • Eligibility Check: Confirm you meet the first-time home buyer criteria (no homeownership in the last five years, Canadian citizen/permanent resident, 18+).
   • Documentation: Gather proof of purchase or construction costs, residency, and citizenship/permanent resident status.
   • Application: Submit your rebate application to the CRA, with forms expected by late 2025. Visit Canada.ca for updates.
   • Tip: Target homes under $1 million for the full $50,000 rebate, and consult a real estate lawyer to avoid pitfalls like ineligible assignment sales.
3. Consumer Carbon Price Removal:
   • Carbon Rebate: File your 2024 tax return to receive the final April 2025 Canada Carbon Rebate (up to $456 for a family of four, plus rural top-up). Sign up for direct deposit with the CRA for faster delivery.
   • Farmers: If eligible, apply for the Fuel Charge Proceeds to Farmers Tax Credit for 2024-25 expenses by the CRA deadline.
   • Tip: Monitor fuel and heating costs after April 1, 2025, to see savings at the pump or on utility bills.

What Critics Are Saying

• Housing Affordability: Urban planner Carolyn Whitzman argues the GST rebate’s 5% savings may not suffice in high-cost cities like Vancouver ($240,000 income needed for affordability) or Toronto ($217,000). She suggests broader measures for all buyers, not just first-timers.
• Inflation Risks: Past stimulus, like the 2024 GST/HST holiday, raised concerns about fueling inflation, though Finance Minister Champagne asserts these measures are targeted to avoid such risks.
• Revenue Loss: Questions remain about how the government will offset the $27 billion tax cut and $3.9 billion GST rebate, especially amid U.S. tariff threats.

Frequently Asked Questions (FAQs)