Businesses: Here are the top changes that will affect business taxes in 2025

In 2024, there were several announcements about changes to business taxes that will take effect in 2025. We’ve gathered the key updates here, along with some helpful resources to make it easier to manage these changes and your taxes in the new year.

Transitioning to online mail for most business correspondence

Beginning in spring 2025, the Canada Revenue Agency (CRA) will make online mail the default for most business correspondence, delivering notices and updates through My Business Account instead of by paper mail.

This change will apply to:

• New business number and program account registrations
• Existing businesses registered for My Business Account
• Businesses with authorized representatives using Represent a Client

To prepare for this change, sign into My Business Account and make sure your email address is up to date. This will allow the CRA to send you email notifications when new mail is available or when important updates are made to your account.

For more information you can visit online mail for business.

The CRA is administering proposed capital gains inclusion rate legislation

On September 23, 2024, the Deputy Prime Minister and Minister of Finance tabled a Notice of Ways and Means Motion (NWMM) to introduce a bill entitled An Act to amend the Income Tax Act and the Income Tax Regulations. This NWMM modified the motion tabled on June 10, 2024. For more information about the capital gains tax changes, please visit this NWMM.

Although these proposed changes are subject to parliamentary approval, consistent with standard practice, the CRA is administering the changes to the capital gains inclusion rate effective June 25, 2024, based on the proposals included in the NWMM tabled September 23, 2024.

For all taxpayers, the new inclusion rate will apply to capital gains realized on or after June 25, 2024. Impacted forms for individuals, trusts, and corporations are expected to be on Canada.ca as of January 31, 2025. Arrears interest and penalty relief, if applicable, will be provided for those corporations and trusts impacted by these changes that have a filing due date on or before March 3, 2025. The interest relief will expire on March 3, 2025. More information will be made available in the coming weeks.

Trust reporting for the 2024 tax year – Bare trusts not required to file the T3 Return and Schedule 15

The Canada Revenue Agency (CRA) will not require bare trusts to file a T3 Income Tax and Information Return (T3 return), including Schedule 15 (Beneficial Ownership Information of a Trust) for the 2024 tax year, unless the CRA makes a direct request for these filings. This is a continuation of the exemption from the trust reporting requirements that was issued for bare trusts for the 2023 tax year.

The new trust reporting requirements still apply to other affected trusts with taxation years ending after December 30, 2023. These affected trusts are required to file a T3 return, including Schedule 15, unless specific conditions are met. 

Find out more: Trust reporting for the 2024 tax year

Canada Pension Plan maximum pensionable earnings and contributions in 2025

• In 2025, the Year’s Maximum Pensionable Earnings (YMPE) will be $71,300.00
• In 2024, a second earnings ceiling was introduced, the Year’s Additional Maximum Pensionable Earnings (YAMPE). The YAMPE is used to determine second additional Canada Pension Plan contributions (CPP2)
• In 2024, the YAMPE was approximately 7% above the YMPE
• In 2025 and every year after, the YAMPE will be approximately 14% above the YMPE
• The 2025 YAMPE will be $81,200.00. Pensionable earnings between $71,300.00 and $81,200.00 are subject to CPP2 contributions
• 2025 is the last year of legislative updates for the Canada Pension Plan enhancement

For more information visit: Canada Revenue Agency announces maximum pensionable earnings and contributions for 2025

Changes for short-term rentals

New legislative changes require short-term rentals to be compliant with the short-term rental laws in the municipality/province in which they are located in order to claim deductions. Short-term rental hosts were required to comply with these applicable provincial and municipal registration, permit, license, and operating requirements by December 31, 2024.

Note: All short-term rentals are subject to the new rules regardless of whether they are provided by a business or an individual.

For more information on accommodation sharing tax obligations, go to Sharing Economy.

The CRA’s fall digital service improvements

This year, the CRA introduced a range of improvements to its digital services. Here’s a quick look at what’s new:

• Improvements to portal webpages: New look and feel for My Account, My Business Account, and Represent a Client sign-in and help pages for easier navigation
• Enhanced mail features: Improved message flagging, archiving, confirmation displays, and user preferences in My Account, My Business Account, and Represent a Client
• My Business Account updates:
  • Enhanced layout and navigation for tasks like viewing balances, payment transfers, responding to notices, and CPP/EI rulings
  • Optional email notifications are now available in My Business Account. While some email notifications are mandatory to ensure the security of accounts, such as when address or direct deposit information is changed, businesses can choose to receive additional optional notifications for payments. More optional notifications will be added in the future
  • Businesses can now view assessment details and account transactions for the Canada Carbon Rebate for Small Businesses in My Business Account. Payments were expected by December 2024 for eligible Canadian-controlled private corporations that filed their 2023 tax return by July 15, 2024. For more information, visit: Canada Carbon Rebate for Small Businesses
  • A new Scientific Research & Experimental Development (SR&ED) Self-Assessment and Learning Tool has been added to My Business Account. This tool helps claimants prepare their project descriptions and track eligible expenditures before submitting an SR&ED claim
• Represent a Client updates:
  • New design for easier access to client information

To stay up-to-date on the enhancements to our digital services visit:

• My Business Account what's new- Canada.ca
• Represent a Client what's new - Canada.ca

Changes to electronic filing of information returns

Starting January 2025, there will be changes to how you file information returns. Here’s a quick look at what’s changing:

• T619, Electronic Transmittal Update: some fields have been removed, modified or added. Be sure to use the latest version of the T619.
• Limiting Submissions to One Return Type: Submissions will be restricted to a single information return type. A combination of multiple return types will no longer be accepted.
• New Online Validations and Reports: new online validations will take place letting you know when there are discrepancies before a submission. Read through the submission filing report as some returns may not be accepted by the CRA, and you may have to resubmit one or more returns prior to the due date. 

For more details, visit the What’s new for 2025 section of the File information returns electronically (tax slips and summaries) webpage.

Extension of administrative policy for T4/T4A reporting

For the tax year 2024, the Government of Canada is extending the administrative relief that it provided employers in 2023 related to Canadian Dental Care Plan (CDCP) reporting. Filers who do not offer dental insurance, or dental coverage of any kind, will be allowed to leave the relevant box blank on the T4 and T4A when code 1 is applicable. This policy applies only if all reasonable efforts have been made to comply with the reporting requirements. The CRA will not reject T4 or T4A slips if the CDCP-related box is left blank. However, non-compliance may result in financial penalties. To avoid delays, employers and other T4 and T4A filers are requested to provide the required information.

The CRA will also be offering a free webinar on the CDCP on January 29, 2025. The webinar will cover important updates, including new boxes on the T4 and T4A slips related to the CDCP. Please sign up to our Payroll electronic mailing list to receive more information.

Contacts

Media Relations
Canada Revenue Agency
613-948-8366
cra-arc.media@cra-arc.gc.ca

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