Finance Minister François-Philippe Champagne said earlier this month that the government would switch to fall budgets permanently starting this year.Justin Tang/The Canadian Press
Ottawa’s move to deliver its federal budget in the fall may create uncertainty over how the government implements and administers new tax proposals, experts suggest.
Using a fall budget to introduce significant tax changes meant to be effective for that current taxation year would put pressure on the Canada Revenue Agency (CRA) to administer those changes in time for the start of the tax-filing season in February, says Brian Ernewein, senior advisor, national tax, at KPMG LLP in Ottawa.
That could “raise problems in terms of tax returns, preparation and forms,” Mr. Ernewein says.
Finance Minister François-Philippe Champagne said earlier this month that the government would switch to fall budgets permanently starting this year, with the economic and fiscal update tabled in the spring.
The federal government has typically presented its annual budgets between February and April, either before or soon after the start of the government’s fiscal year on April 1. The last time the government released a budget in the fall was in 2001.
In a press release, the Department of Finance said a fall budget would better align with the release of the government’s main spending estimates, due by March 1, and with the start of the spring construction season.
Fall budgets would also provide predictability for businesses and investors, and give provinces and territories more flexibility in planning their own budgets, typically tabled in late winter or early spring, it said.
Speaking at a wealth management industry conference in Toronto earlier this month, Liberal member of Parliament Karina Gould, chair of the House of Commons standing committee on finance, said moving to fall budgets “makes a lot of sense both for the parliamentary calendar but also for the business cycles in terms of being able to align with how the rest of the country does their budgeting.”
However, some tax professionals worry about being able to advise clients properly about significant changes introduced so late in the year – especially if budget proposals are meant to be effective as of the budget date or in the current taxation year.
Tax return software providers would also be scrambling to incorporate tax proposals, says Alexandra Spinner, partner with Crowe Soberman LLP in Toronto, in a response sent by e-mail to questions from The Globe and Mail.
In general, the deadline for filing individual returns is April 30, while the deadline for filing trust returns is March 31 (March 30 in leap years.)
“I am very concerned we would not have the necessary tax software available to prepare tax returns far enough in advance of the due dates of the tax returns,” Ms. Spinner says.
She acknowledges that, historically, many changes have been effective as of budget day, “but it is important to recognize that can be very stressful for Canadians and their advisors who want to comply with and understand the tax legislation.”
Mr. Ernewein says if a fall budget contained a major change – such as an increase or decrease in tax rates to be effective as of the current taxation year – the government, and the CRA, in particular, “would really want to have that legislation passed … before any returns are assessed.”
That has been a challenge in some cases, even with measures introduced months earlier in spring budgets.
Earlier this year, the CRA ran into issues when it had to reverse its position on administering the government’s proposed changes to the capital gains tax regime, announced in the 2024 federal budget and meant to be effective in June of that year. The Liberal government said in January it was deferring the change before cancelling it altogether.
Sean McNama, partner, international taxation, at RSM Canada, says he hopes fall budgets will encourage the government to consider deferring the effective date of significant tax proposals, such as the proposed hike to the capital gains inclusion rate.
A Jan. 1, 2027, effective date for a tax proposal introduced in the 2025 budget, for example, would give both Finance and the CRA more time “for good governance to happen.”
On the other hand, he says, if the government introduces significant tax changes in fall budgets that are effective immediately – or even Jan. 1 of the next year – it will create more uncertainty for advisors and taxpayers than introducing such changes in spring budgets does.
Mr. Ernewein, who served for 35 years with the tax policy branch at Finance, says he would prefer the government had committed to presenting a budget during a narrower period of time annually, irrespective of whether the government tabled budgets in the spring or fall.
“There’s a lot of extra energy expended by leaving the budget date pretty open,” he says.
For example, for spring budgets, Finance and other government officials would start their planning in late summer of the prior year based on the possibility the government would decide to release the budget as early as late January.
“You turn a four- or five-month process into an eight-month one,” Mr. Ernewein says, pointing to cases in which the budget isn’t released until late spring. Fixing a smaller window of time to present a budget would be “a good thing.”