Tax Updates for 2025: Key Information for Canadian Taxpayers

As we step into 2025, staying ahead of tax deadlines and understanding new changes is essential for both individuals and businesses. Here’s a detailed breakdown of what to expect from the Canada Revenue Agency (CRA) and practical tips to ensure you’re well-prepared for the upcoming tax season.

1. Tax Filing Deadlines

• General Deadline: April 30, 2025, for most taxpayers.
• Self-Employed Individuals: June 15, 2025, to file, but any taxes owed must be paid by April 30.
• RRSP Contribution Deadline: March 1, 2025.
• T2 Corporation Income Tax Return: Due six months after the fiscal year-end.
• T4 Slips for Employees: Must be distributed and filed by the last day of February.

2. CRA Deadlines & Penalties

Missing CRA deadlines can lead to significant penalties:

• Late Filing Penalty: 5% of the outstanding balance, plus 1% for each month late (up to 12 months).
• Interest Charges: Accrue daily on overdue taxes from the filing deadline.

3. NETFILE Service

The CRA’s NETFILE service opens on February 17, 2025, for electronic submissions.

4. Tax Brackets for 2025

For 2025, the previous year’s tax brackets will be increased by 2.7 per cent to account for inflation and are as follows:?

• 15% on the first $57,375
• 20.5% on income over $57,375 up to $114,750
• 26% on income over $114,750 up to $177,882
• 29% on income over $177,882 up to $253,414
• 33% on income over $253,414

Basic personal amount: For the 2025 tax year, the basic personal amount — on which you do not pay federal income tax — ranges from $14,538 to $16,129, depending on your overall income. That’s up from 2024 figures, which range from $14,256 to $15,705. Those with lower incomes have a higher basic personal tax credit.?

5. Canada Pension Plan (CPP) Adjustments

Starting in 2024, CPP contributions are increasing slightly. Workers will notice a bit more deducted from their paycheques due to new additional earnings ceilings.?

• First-tier ceiling: Increased to $71,300.
• Second-tier ceiling: Increased to $81,200.?

6. Capital Gains

The federal government has proposed significant changes to the capital gains tax, which could impact investors and property owners in 2025. Even though this is not officially legislation, CRA is treating it as if it is.?

Capital gains refer to the profits made from selling an asset, such as stocks or investment properties. A portion of these profits is added to your taxable income, determined by an inclusion rate.?

• Increased Inclusion Rate: The inclusion rate for taxable capital gains will rise from 50% to 67% for individuals earning gains above $250,000 annually.?
• Threshold for Modest Gains: A $250,000 annual threshold ensures individuals with smaller gains will continue to benefit from the existing 50% inclusion rate.?
• Principal Residence Exemption: Canadians’ principal residences remain exempt from capital gains taxes.?
• Impact on Corporations and Trusts: The new two-thirds inclusion rate applies to gains made by corporations and many trusts.?

7. Non-Profits

Every year, registered charities are required to submit a T3010. The deadline for filing this return, known as the Registered Charity Information Return, is six months following the conclusion of the fiscal year.?

8. Canada Child Benefit (CCB)

The CRA will also be increasing CCB payments by 2.7 per cent, which could help put a little extra money in your family’s pockets next year. The CCB payments are based on your family income, and any changes, such as getting married or having another child, can affect the amount you receive. Make sure to update your personal information with the CRA to avoid discrepancies in your benefits.

9. New Filing Requirements and Processes

• T619 Electronic Transmittal Record: Starting in 2025, filers must use the updated T619 form to complete electronic submissions. Ensure your filing software is updated to include this new form.
• Single Return Type Submissions: The CRA now requires each return type (e.g., T1, T2) to be filed separately. This aims to streamline the process and reduce errors but requires filers to be diligent in separating submissions.
• New Validation Processes: The CRA’s new online validation system will flag errors in real-time, helping reduce mistakes and ensuring smoother filings.
• SimpleFile by Phone: The SimpleFile program, which allows eligible individuals to file taxes over the phone, will expand to two million Canadians in 2025. This service simplifies the tax process for those who qualify, offering a convenient and efficient way to file returns.

10. Automobile Deduction Limits

For 2025, the limits are:

• Capital Cost Allowance (CCA) Ceiling: $38,000 for passenger vehicles.
• Leasing Deduction: $1,100 per month.
• Mileage Reimbursement Rates:

11. Online Mail Transition

Starting in spring 2025, the CRA will use online mail as the default for most business correspondence. Ensure your "My Business Account" is updated with the correct notification preferences.

12. RRSP Contribution Limit

The RRSP contribution limit for 2025 is $32,490, up from $31,560 in 2024.

Advice from Your Trusted Accounting Firm

As your accounting partner, we recommend the following steps to prepare for the upcoming tax season:

• Update Your Information: Let us know if you've experienced life changes, such as getting married, having a child, or moving. These changes can impact your tax situation, and we need your most up-to-date information to ensure accurate filings.
• Gather Your Documents: Start organizing your tax documents early. This includes income slips, receipts for deductions, and any correspondence from the CRA. A well-prepared tax file makes the process smoother and helps avoid last-minute stress.
• Stay Informed: Keep an eye on updates from the CRA and other financial news to understand how changes may affect you. If you have questions or need clarification, don’t hesitate to reach out to us.
• Plan Ahead: If you anticipate significant changes in your income or financial situation, discuss this with us. We can help you strategize to minimize your tax liability and make the most of available deductions and credits.

We're here to guide you through these changes and ensure your tax filing is as seamless as possible. If you have any questions or need assistance, please don’t hesitate to contact us. Let's make this tax season stress-free and successful together!

Book a consultation with us at cloudcontroller4hire.com or send us an email at [email protected].

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