This Article is not about Tariffs

It has been a rough few years for the Canada Revenue Agency (CRA) and the Department of Finance, having had to back off at the last minute from several ill-conceived government tax changes.

Unfortunately, these missteps have cost taxpayers millions of dollars of unnecessary accounting fees and, in the latest fiasco, potentially billions in taxes paid prematurely or unnecessarily.

The latest gaff was the proposed increase to the capital gains inclusion rate. In a sudden announcement on January 31, the change was delayed to 2026. Unfortunately, much damage had already been done.

The increase in the inclusion rate for gains realized by corporations and trusts, and for individuals with gains in excess of $250,000, was introduced in the 2024 Federal Budget, with an effective date of June 25, 2024. The inclusion rate was to increase from half to two-thirds of realized gains for those affected entities.

Even though the enacting legislation never passed Parliament, the CRA maintained that it would apply the change as proposed. So, there was a scramble among taxpayers and professional advisors last spring, with countless hours of planning going into the best response.

Many taxpayers sold investments or properties in advance of the deadline in order to pay tax at the lower rate. Unfortunately for many, we found out last week that these taxes were unnecessarily or prematurely paid.

With the deadline to finalize the 2024 tax returns looming and no sign of a sitting Parliament to pass this change into law, the increase was pushed back to January 1, 2026.

And with the likelihood of an election this year and the possibility of a new government, the whole thing remains more uncertain than ever.

So, for the 2024 and 2025 income tax years, the capital gains inclusion rate will remain at 50% for all taxpayers. The inclusion rate is the percentage of the net profit that is included in income when “property” is sold. Property incudes investments, real estate that does not qualify for the principal residence exemption, art, collectibles and other capital property.

-        March 3, 2025 is the deadline for RRSP contributions deductible on your 2024 return. Your allowable amount is shown on last year’s Notice of Assessment.

-        February 28, 2025 is the deadline to make donations and claim a credit on your 2024 return. This is a one-time extension to the usual December 31 deadline.

-        The TFSA limit for 2025 is again $7,000, same as 2024.

-        For people who have not purchased their first home, the tax free First Home Savings Account annual contribution limit is $8,000.

-        Of course, the deadline to file your 2024 tax return is April 30, at which time any taxes owing must be paid, or penalties and interest will apply.  People with self-employment income have a filing deadline of June 15, but still need to pay any tax owing by April 30. Go figure.

Remember to start early and organize those slips, whether preparing your own return or relying on a professional. 

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Dollars and Sense is meant as an introduction to this topic and should not in any way be construed as a replacement for personalized professional advice.

Please consult legal, tax, insurance and investment experts for advice on your unique situation.

David Christianson, BA, CFP, R.F.P., TEP, CIM  is a Senior Wealth Advisor and Portfolio Manager with Christianson Wealth Advisors at National Bank Financial Wealth Management.