Big Tax Shifts in 2025: What Canadian Businesses Can’t Ignore
As 2025 begins, several significant changes to Canadian business taxes are set to take effect. These updates, announced throughout 2024, will impact business owners across the country. Below is a summary of the most important updates to help businesses adapt and stay compliant.
Transition to Online Mail
Starting in spring 2025, the Canada Revenue Agency (CRA) will default to online mail for most business correspondence. Notices and updates will be delivered through My Business Account instead of paper mail.
This change applies to:
Newly registered businesses with business numbers and program accounts
Existing businesses already enrolled in My Business Account
Authorized representatives using Represent a Client
How to Prepare:
Ensure your My Business Account is up to date with a valid email address to receive timely notifications about new mail and account updates.
For further details, visit the CRA’s online mail for business.
Capital Gains Inclusion Rate Changes
Following a Notice of Ways and Means Motion (NWMM) tabled in September 2024, the capital gains inclusion rate will apply to gains realized on or after June 25, 2024. While this legislation is pending parliamentary approval, the CRA is administering these changes.
Key dates:
Impacted Forms: Available on Canada.ca by January 31, 2025.
Interest Relief: Arrears interest relief applies for affected corporations and trusts with filing due dates on or before March 3, 2025. Relief expires after this date.
For more information, visit the NWMM updates on the CRA website.
Updates to Trust Reporting
Bare trusts remain exempt from filing the T3 Income Tax and Information Return for the 2024 tax year unless directly requested by the CRA. However, other affected trusts must comply with updated reporting requirements, including Schedule 15 (Beneficial Ownership Information), for taxation years ending after December 30, 2023.
Learn more: Trust reporting for the 2024 tax year.
Canada Pension Plan (CPP) Enhancements
The final legislative updates for CPP enhancement take effect in 2025. Key details include:
Year’s Maximum Pensionable Earnings (YMPE): $71,300 in 2025.
Year’s Additional Maximum Pensionable Earnings (YAMPE): $81,200 in 2025, approximately 14% higher than the YMPE.
CPP Contributions: Earnings between $71,300 and $81,200 will be subject to second additional CPP contributions (CPP2).
Short-Term Rental Regulations
Starting in 2025, deductions for short-term rental properties will only be allowed if the property complies with all applicable provincial and municipal registration, licensing, and operating requirements. This applies to all short-term rentals, whether operated by individuals or businesses.
Enhancements to CRA Digital Services
Recent updates to CRA digital services aim to improve user experience:
Improved Portals: My Business Account, My Account, and Represent a Client now feature enhanced navigation and design.
Enhanced Notifications: Optional email alerts for payments and other updates are now available, with more features to follow.
New Tools: A self-assessment tool for Scientific Research & Experimental Development (SR&ED) claims is now accessible via My Business Account.
Updates to Information Return Filing
Effective January 2025, new rules apply to the electronic filing of information returns:
T619 Updates: Fields on the T619 form have been modified—use the latest version for accuracy.
Return Type Restrictions: Submissions are limited to a single type of return per file.
Validation Tools: Online validations will flag discrepancies before submission, minimizing errors.
T4/T4A Reporting for the Canadian Dental Care Plan
For the 2024 tax year, employers without dental coverage can leave the relevant T4/T4A fields blank, provided they make reasonable efforts to comply. Non-compliance may still result in penalties.
To assist with compliance, the CRA is hosting a free webinar on January 29, 2025, covering updates related to the Canadian Dental Care Plan (CDCP).
Staying Ahead
The changes to business taxes in 2025 emphasize the importance of preparation and staying informed. WealthCo recommends that business owners consult with professional advisors to ensure compliance and identify opportunities amidst these updates. By understanding and adapting to these changes, businesses can protect their financial health and focus on growth.
Disclaimer: The information in this article is for informational and educational purposes only and is not meant to be construed as financial advise. Please consult with a qualified financial advisor before making any financial decisions.
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