On November 4th, 2025, the Minister of Finance and National Revenue, The Honourable François-Philippe Champagne, tabled the 2025 Federal Budget: Canada Strong.
National Payroll Institute representatives were invited to attend the reading of the embargoed budget documents during the lockup. The 2025 budget is focused on expanding the capacity of the Canadian economy to create new opportunities today and for the next generation.
The Budget contains few measures that directly impact payroll and several initiatives that may affect employers and employees.
PERSONAL SUPPORT WORKERS TAX CREDIT
Budget 2025 proposes to introduce a temporary Personal Support Workers Tax Credit, which would provide eligible personal support workers working for eligible health care establishments with a refundable tax credit of five per cent of eligible earnings, providing a credit value of up to $1,100.
A number of conditions would need to be met to be considered an eligible personal support worker.
- The person must ordinarily provide one-on-one care and essential support to optimize and maintain another individual’s health, well-being, safety, autonomy, and comfort, consistent with that individual’s health care needs as
directed by a regulated health care professional or a provincial community health organization.
- The person’s main employment duties must include helping patients with activities of daily living and mobilization.
Eligible health care establishments would be hospitals, nursing care facilities, residential care facilities, community care facilities for the elderly, home health care establishments, and other similar regulated health care establishments.
Eligible earnings would include all taxable employment income, including wages and salaries, and employment benefits (as well as similar tax-exempt income and
benefits earned on a reserve) that is earned as an eligible personal support worker performing employment duties for eligible health care establishments.
Amounts earned in British Columbia, Newfoundland and Labrador, and the Northwest Territories would not be eligible, as these jurisdictions have signed
bilateral agreements with the federal government to include a “Personal Support Workers and Related Professions Addendum” to their Aging with Dignity funding agreements, which provide funding over five years to increase personal support
workers’ wages.
Employers would need to certify their employees’ eligible earnings in the prescribed form and manner.
PROTECTING WORKERS AGAINST IMPROPER CLASSIFICATION
To crack down on employers that misclassify employees, budget 2025 proposes to provide $77 million over four years starting in 2026-27, with ongoing funding of $19.2 million annually, for the Canada Revenue Agency (CRA) to implement a program that addresses non-compliance related to personal services businesses, as well as lift the moratorium on reporting fees for services in the trucking industry.
LOWERING BARRIERS TO ACCESS THE CANADA DISABILITY BENEFIT
In July 2025, the Canada Disability Benefit increased the financial well-being of hundreds of thousands of working-age low-income persons with disabilities. However, for many, obtaining a valid Disability Credit certificate to become eligible for the benefit can represent a financial barrier.
Budget 2025 proposes funding of $115.7 million over four years, beginning in 2026-27, and $10.1 million per year ongoing, including administrative costs, for a one-time supplemental Canada Disability Benefit payment of $150 in respect of each Disability Tax Credit certification, or re-certification, giving rise to a Canada Disability Benefit entitlement.
This one-time payment would be retroactive to the launch of the Canada Disability Benefit. Following successful completion of the regulatory process, the first supplemental payments are expected to be made to Canada Disability Benefit recipients before the end of 2026-27.
EXTENDING EMPLOYMENT INSURANCE PARENTAL BENEFITS DURING BEREAVEMENT
In Budget 2025, the government proposes to amend the Employment Insurance Act to allow claimants receiving Employment Insurance parental benefits to access an additional eight weeks of parental benefits in the event of the death of the child.
PERSONAL INFORMATION PROTECTION AND ELECTRONIC DOCUMENTS AMENDMENTS
In Budget 2025, the government proposes to amend the Personal Information Protection and Electronic Documents Act (PIPEDA) to introduce a data-mobility right, facilitating an economy-wide approach to data sharing.
EMPLOYMENT INSURANCE PREMIUM
The EI premium rate is projected to be $1.63 per $100 of insurable earnings in 2027. The actual premium rate for 2027 will be set in the fall of 2026, incorporating the recommendation of the Canada Employment Insurance Commission based on projections provided by the Office of the Chief Actuary.
DELIVERING AUTOMATIC FEDERAL BENEFITS FOR LOW-INCOME INDIVIDUALS
As announced on October 10th, through Budget 2025, the Canadian government will start Automatic Federal Benefits for the 2026 tax year that will reach up to 5.5 million low-income Canadians by the 2028 tax year.
These individuals will be able to review and confirm a pre-filled income tax return, and the Canada Revenue Agency (the CRA) will automatically file these individuals’ taxes to ensure they receive government benefits they qualify for, including benefits that these Canadians may not be aware they are entitled to, such as the Canada Child Benefit and the GST/HST Credit.
Budget 2025 proposes to amend the Income Tax Act to grant the CRA the discretionary authority to file a tax return for a taxation year on behalf of an individual (other than a trust) who meets all the below criteria.
- The individual’s taxable income for the taxation year is below the lower of either the federal basic personal amount or provincial equivalent (plus the age amount
and/or disability amount, where applicable).
- All income of the individual for the taxation year is from sources for which
specified information returns have been filed with the CRA.
- At least once in the preceding three taxation years, the individual has not filed a return.
- The individual has otherwise not filed a return for the taxation year prior to, or within 90 days following, the tax filing deadline for the year.
- Any other criteria, as determined by the Minister of National Revenue
PROTECTING WORKERS AGAINST WAGE THEFT
Wage theft occurs when an employer fails to pay compensation rightfully owed to an employee and represents one of the most common labour standards contraventions in federally regulated sectors.
To crack down on employers that do not pay workers the wages they have earned, the 2024 Fall Economic Statement announced the government’s intent to make regulatory changes to substantially increase the penalties imposed on federally regulated employers who commit wage theft.
Please see Federal Budget 2025 for more details on these and other measures. The Institute will monitor the progress of these announcements and the resulting administrative impact and will include them in our Late Breaking Payroll News as details become available.