As 2025 unfolds, businesses in Canada should prepare for several significant tax changes introduced by the Canada Revenue Agency (CRA). These updates, effective this year, aim to streamline processes and ensure compliance with evolving tax regulations. Here’s a comprehensive overview to help your business navigate these changes effectively.
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Transition to Online Mail for Business Correspondence
Starting in spring 2025, the CRA will default to online mail for most business communications. Notices and updates will be delivered through My Business Account instead of traditional paper mail. This transition applies to:
- New business number and program account registrations.
- Existing businesses registered for My Business Account.
- Businesses with authorized representatives using Represent a Client.
Action Steps:
- Ensure your business is registered for My Business Account.
- Update your email address within the platform to receive notifications about new mail or important account updates.
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Changes to Capital Gains Inclusion Rate
On September 23, 2024, the Deputy Prime Minister and Minister of Finance tabled a Notice of Ways and Means Motion proposing amendments to the Income Tax Act, specifically altering the capital gains inclusion rate. Although pending parliamentary approval, the CRA is administering these changes effective June 25, 2024.
Key Points:
- The new inclusion rate applies to capital gains realized on or after June 25, 2024.
- Updated forms for individuals, trusts, and corporations will be available on Canada.ca by January 31, 2025.
- Arrears interest and penalty relief will be provided for corporations and trusts with filing due dates on or before March 3, 2025. This relief expires on March 3, 2025.
Recommendation:
- Consult with a tax professional to understand how these changes impact your business and to ensure timely compliance.
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Trust Reporting Requirements for 2024 Tax Year
The CRA has extended the exemption for bare trusts from filing the T3 Income Tax and Information Return, including Schedule 15, for the 2024 tax year, unless directly requested. However, new trust reporting requirements apply to other affected trusts with taxation years ending after December 30, 2023.
Steps to Take:
- Determine if your trust is classified as a bare trust or another type subject to the new reporting requirements.
- If applicable, prepare to file a T3 return, including Schedule 15, unless specific conditions exempt your trust.
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Updates to Canada Pension Plan (CPP) Contributions
Significant updates to the Canada Pension Plan (CPP) take effect in 2025:
- The Year’s Maximum Pensionable Earnings (YMPE) is set at $71,300.
- Introduced in 2024, the Year’s Additional Maximum Pensionable Earnings (YAMPE) will be approximately 14% above the YMPE in 2025, amounting to $81,200.
- Earnings between $71,300 and $81,200 are subject to second additional CPP contributions (CPP2).
- 2025 marks the final year of legislative updates for the CPP enhancement.
Employer Responsibilities:
- Adjust payroll systems to account for the updated YMPE and YAMPE thresholds.
- Ensure accurate calculation and remittance of CPP contributions for all employees.
Staying informed and proactive about these tax changes is crucial for compliance and optimal financial management.
If you have any questions regarding Business Taxes, feel free to contact finnection via email at info@finnection.ca or call us at (647) 795-5462
Disclaimer: Above information is subject to change and represent the views of the author. It is shared for educational purposes only. Readers are advised to use their own judgement and seek specific professional advice before making any decision. Finnection Inc. is not liable for any actions taken by reader based on the information shared in this article. You may consult with us before using this information for any purpose.