The 2025 tax season is underway. Here are the new credits and refunds — and why some filers may want to ‘take it slower’

If you’re the kind of person who always files your taxes by the first week of March, it might make sense to wait. Tax experts warn that the information returns banks send out, such as the T3, T4, T4A and T5 forms, have been delayed this year due to the federal government’s flip-flop on the capital gains inclusion rate.

The Trudeau government originally announced that as of last June it would raise the inclusion rate for taxes on capital gains in excess of $250,000 for individuals, as well as for capital gains realized by corporations and most trusts. But it has since pushed the legislation forward and is now saying the tax on capital gains won’t rise until 2026.

Here’s why you might want to consider being a little slower filing your taxes — and the new tax credits and refunds for which you may be eligible.

How to properly prep your tax filing

The main slips you need to file your taxes, including T4s for employment income, can generally be accessed through the CRA website under your MyAccount profile.

If you are a first-time taxpayer, the CRA has launched a document verification service this year to make account registration easier, allowing users to gain access to their CRA account without having to wait for a security code by mail, which can take up to 10 business days.

It’s up to individuals to gather their receipts for medical expenses, donations, child-care expenses and union dues.

Delay in increase to the capital gains inclusion rate

Good news for cottage owners: the date on which the capital gains inclusion rate will increase to two-thirds from one-half has been deferred until Jan. 1, 2026.

Employers who operate a profit-sharing plan and securities dealers can submit T4PS and T5008 information returns by March 17 without a late-filing penalty and “impacted T3 Trust filers” will have until May 1 to submit their tax slips.

Any taxpayer reporting capital dispositions in 2024 will have until June 2 to file their T1 personal income tax returns without a late-filing penalty.

“Given ongoing challenges faced by some filers,” the CRA will also grant penalty relief on other information returns that are normally due Feb. 28 for filing on or before March 7. Those include the T4 filed by employers, the T4A filed by employers, pension providers and others, and the T5 filed by banks and other entities that pay investment income.

“So this year, my advice actually is for people to be a little bit slower,” said Arif Amjad, partner with SRJ Chartered Professional Accountants.

“A lot of times they use auto-fill on a lot of tax software, which allows them to pull the data directly from CRA. But if CRA doesn’t have the data, then your filing doesn’t have all the data that you need,” he said.

What’s new for 2024 income taxes

Short-term rentals: One of the big changes this tax season is that starting in January 2024, individuals who rent out residential properties on a short-term basis but do not comply with provincial or municipal registration requirements will not be able to deduct the expenses, according to the CRA’s website.

“The way the law is written is that you have to be compliant every single day, so if you’re not complying for one day, you would have to probate the expenses for one day,” Amjad said.

But the CRA has introduced a one-time exemption exception for 2024, which means that if a short-term rental complies with the bylaws by Dec. 31, 2024, it will be considered compliant for the entire tax year.

Gig workers and contractors: Attention Uber drivers, online tutors and e-commerce sellers: the tax rules for those in the sharing and gig economy are changing this tax season.

The CRA has rolled out new reporting rules for digital platform operators, requiring them to file information returns for reportable sellers on its platforms to the CRA. The filing deadline was Jan. 31, but the CRA has waived penalties for late filings before July 31.

In the examples given in the CRA guidance, the reporting rules could apply to e-commerce websites, short- and long-term rental websites, car rental websites, ride-sharing apps and coaching platforms.

“The CRA does have the ability now to cross-check that data against whatever you’re following. Hopefully, taxpayers are already reporting everything as they’re supposed to be,” Amjad said.

Other changes: Other tax changes include an increase to the minimum tax rate and basic exemption threshold of alternative minimum tax, an extension to applying for the Canada child benefit and the child disability benefit after a child’s death, an increase to the homebuyer’s plan withdrawals and an extension of the repayment period. The full list can be accessed through the CRA website.

Tax credits and deductions

A notable change to this year’s tax credits is the charitable donation tax credit, said Ryan Minor, the director of tax at Chartered Professional Accountant Canada.

The federal government is extending the deadline for making donations eligible for tax support in the 2024 tax year until Feb. 28, 2025.

“Because of a postal strike, some smaller charities that rely on mail service were negatively impacted, particularly at the end of the year,” said Minor, adding that the extension will give people extra time to contribute to charities.

Additionally, Minor noted there is a “generous” bump in the lifetime capital gains exemption this year, which will allow small-business owners to avoid taxes on up to $1.25 million in gains from business sales.

After another raging wildfire season, the federal government has increased the amount of tax credit a volunteer firefighter or search and rescue volunteer can claim to $6,000 from $3,000.

When asked about existing tax credits that were often overlooked, Minor highlighted the disability tax credit, saying parents may not know they can also claim credits if their children qualify.

With files from The Canadian Press

Estella Ren is a Toronto-based general assignment reporter for the Star. Reach her via email: eren@thestar.ca