Federal government extends filing deadline for taxpayers reporting capital gains or losses
The decision by the Department of Finance to defer implementation of the proposed capital gains inclusion rate increase to January 1st, 2026, was welcomed by impacted taxpayers, notwithstanding all of the damage the proposals had already caused.
They received more good news with the announcement that Ottawa is providing interest rate and penalty relief until June 2nd, 2025, to taxpayers who report a capital gain or loss for the 2024 tax year on their T1 tax form. T3 trust filers reporting capital dispositions for the 2024 tax year will have until May 1st, 2025, to file their returns without incurring penalties or arrears interest.
It is unclear whether interest and penalty relief will be available to corporations with tax filing due dates before March 3rd, 2025.
According to an update from CPA Canada, the CRA has confirmed that: “T3 tax returns that have already been filed using the one-half rate are not impacted. Relief would also apply to 2025 T3 tax returns where there is a disposition to be reported and the return has a fiscal period ending between January 1, 2025 and January 31, 2025.”
The reason for the T1 and T3 filing relief is to provide affected taxpayers with additional time to meet their compliance obligations, according to the Department of Finance.
As noted in a previous blog, the proposed tax change would see the capital gains inclusion rate increase from one-half to two-thirds on individual capital gains of more than $250,000 per year, and on all annual capital gains realized by corporations and most trusts. The measure was to take effect on June 25th, 2024, but had yet to receive royal assent. The CRA confirmed last year that it was implementing the tax change despite parliament’s prorogation until March 14th, 2025, only to change course once the measure’s effective date was deferred until 2026.
Now, all capital gains realized before January 1, 2026, will be subject to the one-half inclusion rate, unless an exemption applies. CRA has also confirmed that in the coming weeks (if not days), it will provide tax forms—which were being amended to account for the proposed increase—that reflect the current one-half inclusion rate. CRA notes that corporations ‘can continue to use existing forms and tax software to file using the one-half inclusion rate until further notice.’
Given the current political situation in Ottawa, along with near-daily tariff threats by the Trump administration in the U.S., the current tax and spending policy environment is fluid. Expect regular updates from our team on the tax measures that impact you or your business, as they become available.
Armando Iannuzzi, Co-Managing Partner
If you have questions about capital gains inclusion rate changes, contact a member of our team.
