Key Business Tax Changes Coming in 2025: What You Need to Know

As 2024 rolls to an end, several important updates to business taxes have been announced, set to take effect in 2025. These changes could impact how you file taxes, manage correspondence with the Canada Revenue Agency (CRA), and handle pension contributions. Here’s everything you need to know to stay ahead and ensure your business remains compliant.

Transition to Online Mail for CRA Business Correspondence

Starting in spring 2025, the Canada Revenue Agency (CRA) will default to delivering business correspondence through its My Business Account portal instead of traditional paper mail. This applies to:

• Newly registered businesses and program accounts.
• Existing businesses already registered on My Business Account.
• Businesses represented by third-party agents via the “Represent a Client” portal.

What You Should Do:

• Log in to your My Business Account to confirm your email address is up-to-date.
• Enable email notifications to stay informed about new communications or updates to your account.

Full details are available on the CRA’s online mail for business page.

Changes to the Capital Gains Inclusion Rate

In September 2024, the Deputy Prime Minister proposed changes to the capital gains inclusion rate under the Income Tax Act. While these changes are subject to parliamentary approval, the CRA has started administering them as of June 25, 2024.

• What’s Changing: The updated rate applies to capital gains realized after June 25, 2024.
• Updated Forms: New forms for individuals, trusts, and corporations reflecting these updates will be available by January 31, 2025.
• Interest and Penalty Relief: Businesses filing taxes due up to March 3, 2025, can take advantage of temporary penalty relief, but this relief will expire after March 3, 2025.

For more details, consult the official Notice of Ways and Means Motion.

Trust Reporting Requirements for the 2024 Tax Year

Good news for those managing bare trusts: the CRA has exempted bare trusts from filing the T3 Income Tax and Information Return (along with Schedule 15) for the 2024 tax year unless specified. Meanwhile, other trusts with tax years ending after December 30, 2023, must still file a T3 return if specific conditions apply.

Visit the CRA’s trust reporting requirements page for detailed information.

Changes to the Canada Pension Plan (CPP) in 2025

The final phase of legislative updates tied to the CPP enhancement will take place in 2025. Here’s what employers, employees, and the self-employed need to know about how their pensionable earnings and contributions may change:

• Year’s Maximum Pensionable Earnings (YMPE): The 2025 YMPE will be set at $71,300.
• Year’s Additional Maximum Pensionable Earnings (YAMPE): First introduced in 2024, YAMPE represents an additional earnings ceiling:
  • For 2025, YAMPE will be approximately $81,200, which is 14% above YMPE.
• Additional CPP Contributions: Pensionable earnings between $71,300 and $81,200 will be subject to second additional CPP contributions (CPP2).

Employers and individuals are encouraged to visit the CRA’s page on CPP enhancements for further guidance.

Staying Updated and Preparing for Tax Season

With these significant updates ahead, staying informed and proactive is key. Ensure your registrations, accounts, and tax documentation are in order before 2025. If you’re unsure how these changes will affect your business, getting help from tax professionals can save you time, money, and compliance headaches.

Why Choose Professional Help for Your Taxes?

When it comes to taxes, they are always changing, always being updated! That’s why it’s always recommended to use a professional like JHG Corporate and Tax Services Inc to ensure you’re maximizing your returns and meeting all compliance requirements. Don’t risk missing out on deductions or making costly errors!

Book an Appointment: Click here to schedule a meeting with a trusted tax expert today. Or call our hotline at 778-691-6677 to speak directly to a professional who can guide you through these changes.

Sources:

• CRA Online Mail for Business
• Notice of Ways and Means Motion
• Trust Reporting for 2024
• CPP Enhancements

When it comes to taxes, they are always changing, always being updated! That is why it is always recommended to use a professional like JHG Corporate and Tax Services Inc to get your taxes done to ensure you are getting the most out of your tax return. Click to set an appointment or call 778-691-6677 today!

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