The comment period on draft tax legislation released August 25, 2025 has closed, with stakeholders now publishing their commentary and recommendations to the Department of Finance Canada.

Among them the Conference for Advanced Life Underwriting (CALU), a professional membership association serving life insurance and financial advisors, says the legislative package includes several measures of particular interest to its members. These include capital gains rollover on investment rules, employee ownership trust (EOT) rules and trust reporting. The submission also discusses outstanding legislation – proposals previously announced in earlier budgets and technical tax bills (TTBs) which remain outstanding.

Among the outstanding legislation CALU is calling on the government to enact, the association is asking for an increase in the capital gains exemption from just under $1.02-million in 2024 to $1.25-million. They are also asking for an extension of capital loss carry back rules and stop-loss rule exemptions. Finally, they are calling for the creation of a Canadian Entrepreneur’s Incentive to reduce the capital gains inclusion rate on the disposition of qualifying shares or property. “Finance Canada has announced that guidance on these and other previously announced measures will follow at a later date,” according to a bulletin sent to CALU members in August.

In its Sept. 12 submission to Finance Canada, CALU is calling for the Canadian Entrepreneur Incentive (CEI) and capital gains rollover provisions to be combined into one measure “because they share the same tax objective to incentivize more entrepreneurs to increase their investment in small business,” they write. “We also maintain that excluding certain types of businesses from eligibility for these two measures (for example, professional corporations and businesses engaged in the leasing, rental or sale of real property) creates a two-tier system of tax incentives for small business owners.” 

Regarding EOTs, the association says it would be appropriate to extend the availability of the EOT capital gains exemption until the end of 2027, as most business owners will likely wait for the final legislation before proceeding to consider a sale to an EOT. “We have reconsidered our previous recommendation that the EOT capital gains exemption should not be extended beyond its sunset provision at the end of 2026.” 

Bare trust rules, they add, will generate continued confusion. “Finance Canada and the Canada Revenue Agency should continue to monitor and where necessary provide greater clarity on the types of bare trusts that will be subject to the tax reporting rules,” they write.

Trust ownership of life insurance policies 

The submission also discusses trust ownership of life insurance policies, looks at trust reporting in detail and examines amendments to rules governing employee life and health trusts (ELHTs) which they say could negatively impact those already established for employees of small businesses. “We believe the final ELHT legislation achieved a suitable accommodation of the needs of government and small business owners. However, we are concerned that amendments proposed in the 2025 TTB (technical tax bill) could adversely impact existing ELHTs.” The adverse impacts include the loss of benefits for employees and small business-owning families.

“We are further concerned this change would be effective as of January 1, 2026, which provides insufficient time for small business owners and their advisors to understand and respond to it,” they write.

“CALU will discuss the proposed amendment to the rules governing ELHTs with officials from Finance Canada in the near future. We are therefore requesting additional time to complete these discussions and provide our views and recommendations before any legislative action is taken.”