Simon Says: Upcoming Tax Changes in Canada for 2025
As we approach the 2025 tax year, there are several key updates and deadlines that Canadians need to keep in mind. Staying informed will help ensure compliance and maximize tax savings. Below, we outline the most important tax changes and deadlines for individuals and businesses in Canada.
1) RRSP Contribution Limit
The Registered Retirement Savings Plan (RRSP) contribution limit for 2025 has been updated. The new maximum contribution limit is $31,560, up from $30,780 in 2024. Remember, your individual contribution room is based on 18% of your earned income from the previous year, up to this maximum limit. Any unused contribution room from prior years can also be carried forward.
2) TFSA Contribution Room
The Tax-Free Savings Account (TFSA) annual contribution limit for 2025 is set at $7,000, the same as 2024. This brings the cumulative TFSA contribution room for eligible individuals who have never contributed to $102,000, assuming they were at least 18 years old in 2009 and have been Canadian residents since.
3) RESP Updates
For Registered Education Savings Plans (RESPs), the maximum annual contribution to receive the full Canada Education Savings Grant (CESG) remains at $2,500 per child. The CESG provides a 20% match on contributions, up to $500 annually per beneficiary. Consider planning contributions early in the year to maximize growth potential.
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4) Holiday Tax Break
Effective December 14, 2024, until February 15, 2025, the federal government has waived the Goods and Services Tax (GST) and Harmonized Sales Tax (HST) on certain qualifying items, including:
· Food and beverages
· Children's clothing and footwear
· Diapers
· Child booster seats
· Christmas trees
· Print books and newspapers
· Toys
· Games
5) Instalment Deadlines for Personal and Corporate Taxes
For taxpayers who pay taxes by instalments:
· Personal Taxes: Instalment payments are due on March 15, June 15, September 15, and December 15, 2025.
· Corporate Taxes: Instalment deadlines depend on the corporation’s fiscal year. Generally, payments are due monthly or quarterly, depending on the size of the business and whether it qualifies as a Canadian-controlled private corporation (CCPC).
6) HST Payment Deadlines
Businesses registered for Harmonized Sales Tax (HST) must adhere to their reporting period:
· Annual Filers: HST payments and returns are due by April 30, 2025.
· Quarterly Filers: Deadlines are April 30, July 31, October 31, and January 31, 2026.
· Monthly Filers: Payments are due on the last day of the month following the reporting period.
7) Personal Tax Deadlines
· Regular Filers: The deadline to file your personal income tax return is April 30, 2025. Any balance owing must also be paid by this date.
· Self-Employed Individuals: While the filing deadline is extended to June 15, 2025, any taxes owed must still be paid by April 30, 2025.
8) Corporate Tax Deadlines
Corporations must file their tax returns within six months after the end of their fiscal year. For example:
· If your fiscal year ends on December 31, 2024, your corporate tax return is due by June 30, 2025.
· Taxes owing must generally be paid within two months after the fiscal year-end, or three months for CCPCs that meet certain criteria.
9) Capital Gains Inclusion Rate Adjustment
Starting in 2025, the capital gains inclusion rate will increase from 50% to 67% for individuals realizing gains above $250,000 annually. This means that a larger portion of capital gains will be subject to taxation for high-income earners.
For corporations, all capital gains will incur the new inclusion rate from 50% to 67%.
Conclusion
By staying informed about these upcoming changes and deadlines, you can better manage your financial and tax planning for 2025. If you have any questions or need assistance, consult a tax professional or accountant to ensure you’re fully prepared.
