Tax season is about to kick off in Canada.
Canadians can start filing their taxes online with the Canada Revenue Agency (CRA) on Monday, Feb. 24.
Before you dive into filling out the necessary slips and claiming credits and benefits, it may help to be aware of what’s new on the income tax and benefit return.
Here is a list of tax changes the CRA has made that could affect what you can claim and how much you get on your return.
Home Buyers’ Plan (HBP)
If you plan on buying a home this year and need to take money out of your Registered Retirement Savings Plan (RRSP) to afford it, the HBP withdrawal limit has increased from $35,000 to $60,000 for withdrawals made after April 16, 2024.
Additionally, the government introduced temporary repayment relief. This allows Canadians who make their first HBP withdrawal between Jan. 1, 2022, and Dec. 31, 2025 to defer the start of their 15-year repayment period by an additional three years. So, you won’t have to start making repayments until five years after your withdrawal.
“For a lot of people, especially now, it’s hard to make those payments back,” Gerry Vittoratos, the national tax specialist at Montreal-based online tax filing service UFile, said.
He says this is one good example of why Canadians should pay attention to what the government announces in its budget. Check out the other best practices he recommends to make filing your taxes a breeze.
Short-term rentals
According to the CRA, as of Jan. 1, 2024, individuals are no longer able to deduct expenses related to non-compliant short-term rentals.
Vittoratos gave two examples of who this might affect. The first is Canadians who run a short-term rental in a city that doesn’t permit them, like Montreal, for example.
The other is Canadians who didn’t get a licence from their city or province to run a short-term rental. Essentially, if you’re running a short-term rental illegally, the government will reject any claims for expenses related to your rental.
Charitable donations
The CRA has extended the deadline for Canadians to make donations that they can still claim on their 2024 tax return.
It has been extended by two months to Feb. 28, 2025.
Capital gains
Last month, Canada’s Department of Finance announced that it will introduce legislation in Parliament to delay the enforcement of the capital gains inclusion rate change from June 25, 2024, to Jan. 1, 2026.
Ottawa planned to increase the inclusion rate from one-half to two-thirds for any Canadian individual or corporation that makes over $250,000 per year in capital gains. The tax hike would impact a small portion (0.13 per cent) of the wealthy population.
“The Canada Revenue Agency (CRA) has reverted to administering the currently enacted capital gains inclusion rate of one-half,” reads the finance department’s announcement.
“This means that all capital gains realized before Jan. 1, 2026, will be subject to the currently enacted inclusion rate of one-half unless an exemption applies.”
According to the government, the CRA will issue forms to individuals subject to the capital gains tax that have been reverted to the current rate in the coming weeks.
“The CRA will grant relief in respect of late-filing penalties and arrears interest until June 2, 2025 for impacted T1 Individual filers and until May 1, 2025, for impacted T3 Trust filers to provide additional time for taxpayers reporting capital dispositions to meet their tax filing obligations,” reads the announcement.
The agency says it’s working as quickly as possible to adjust its systems and forms so taxpayers who need to report capital dispositions can do so as early as possible.
Canada Carbon Rebate (CCR)
According to the CRA, under proposed changes, eligibility for the CCR rural supplement will be expanded to include Canadians who live within a rural area or small population centre (less than 30,000 individuals) in a city, as designated by Statistics Canada.
“Eligibility for the supplement will be based on the geographical designations from the most recent census published before the tax year,” explained the CRA. “These changes will be reflected in payments starting in April 2025.”
This only applies to residents of Alberta, Manitoba, New Brunswick, Nova Scotia, Newfoundland and Labrador, Ontario and Saskatchewan.
Canada Child Benefit (CCB)
Starting this year, the CRA says eligibility for the CCB has been extended for six months after a child’s death if the person claiming the benefit for that child is otherwise eligible.
The extended period also applies to the child disability benefit.
