Some quick points to consider…

• CRA will receive information from online digital platforms that facilitate the sale of goods and provisions of services, such as Airbnb, VRBO, Uber, etc., in respect of the 2025 calendar year, by January 31, 2026. Ensure that all income is properly reported.
• The first-time home buyers’ GST/HST rebate, along with the existing GST/HST new housing rebate, would provide a 100% GST rebate on homes valued at up to $1 million, with the rebate being phased out in a linear manner for homes valued between $1 million and $1.5 million. The rebate was originally proposed to take effect on May 27, 2025; however, the effective date has been moved to March 20, 2025, the date Prime Minister Mark Carney first announced the rebate.
• A non-residentmaking an assignment sale is subject to the same withholding and disclosure requirements as applicable to a direct sale of real property.
• CRA has cautioned against using aggressive tax schemes involving complex insurance-based arrangements (often using critical illness insurance and loans) that are designed to help taxpayers inappropriately avoid paying taxes. CRA cautioned that certain insurance products do not meet the standards of valid insurance policies and are solely used to support the tax scheme.

Trucking Sector: New Reporting Obligations

To address perceived tax non-compliance in the trucking sector, CRA announced that penalties will now apply when businesses in the trucking industry fail to file T4A slips reporting fees for services (Box 048) exceeding $500 paid to CCPCs (Canadian-controlled private corporations) in the trucking industry, commencing for the 2025 calendar year.

CRA indicated that a business will be considered to be operating in the trucking industry if more than 50% of its primary source of income is from trucking activities. A business with multiple activities whose trucking activities make up less than half of the primary income it earns is not considered to be operating in the trucking industry. The payer can request that their supplier confirm whether their corporation is a CCPC.

For the 2025 tax year, payments for fees for service must be reported in Box 048 of the T4A slip by February 28, 2026. As this date falls on a Saturday, the T4A will be considered on time if CRA receives it or it is postmarked on or before Monday, March 2, 2026.

CRA also noted that T4As are still required to be filed for other situations; however, the penalty moratorium remains in effect for payments made or issued to businesses outside the trucking industry.

ACTION: If in the trucking industry, prepare now to comply with these filing obligations.

Cancellation of OAS Enrollment: Don’t be Late!

OAS provides a monthly income-sensitive payment to eligible individuals aged 65 and older. Individuals who normally receive OAS are occasionally surprised when some OAS is subject to a special tax (commonly referred to as a “clawback”) with their personal tax filings due to high earnings. In particular, OAS is clawed back at a rate of 15% of adjusted income received in that year, above an indexed threshold of $93,454 for 2025 and $95,323 for 2026.

Individuals whose income exceeds this threshold may consider deferring the commencement of OAS. Future OAS payment increases of .6% per month of delay (to a maximum of 36% for 5 years of deferral) are provided to compensate for the deferral. If OAS is clawed back in its entirety, it costs nothing to delay but provides the benefit of increased future payments. Increased OAS payments also increase the income level at which all OAS is clawed back.

In a November 18, 2025 Federal Court of Appeal (FCA) case, an individual was not permitted to cancel their OAS pension enrollment decision when requested beyond the allowable period.

The taxpayer had been automatically enrolled for OAS in 2020. He neither objected to the enrollment within the 90-day window to object, nor applied for cancellation within the allowed six months from the first payment, despite Service Canada informing him of those options. Nearly two years later, the taxpayer sought to cancel his enrollment, citing ongoing work, the COVID-19 pandemic and the delay in the Minister’s response as reasons for delays in asking for the cancellation. He wanted to cancel his enrollment as his earnings from ongoing work were eroding his benefit; a delay in receiving OAS would have resulted in increased future payments.

Taxpayer loses

The FCA agreed with the Federal Court’s determination that the refusal was reasonable. The analysis of deadlines for reconsideration and cancellation was conceptually sound.

ACTION: Consider whether your OAS payment may be clawed back due to high income before applying. If you have been automatically enrolled, promptly cancel your enrollment if desired.

Election to Stop Contributing to CPP: Processing Delays

An employee may elect to stop contributing to CPP, provided they are at least 65 years of age (but under 70), receive a CPP or QPP retirement pension and have earnings subject to CPP contributions.

A November 13, 2025 Tax Court of Canada case reviewed the timing of an employee’s election to cease contributing to the CPP when he began collecting retirement benefits at age 65. The employee was the sole employee and shareholder of the corporation.

The key facts were as follows:

• the employee applied for CPP effective the month he turned 65, July 2021;
• the employee filed Form CPT30, Election to Stop Contributing to the Canada Pension Plan, or Revocation of a Prior Election, on September 14, 2021;
• the employee’s application was processed and he first received benefits on May 7, 2022, retroactive to July 2021; and
• CRA assessed the employer for CPP premiums for calendar 2022 and 2023.

The CPT30 election to cease paying CPP premiums after age 65 can only be made if a CPP retirement pension is payable to the employee. CRA argued that the election was void on the basis that retirement benefits were not payable to the employee until the application was processed and he received his first payment in May 2022. As such, CPP premiums continued to be required.

Taxpayer wins
The Court stated that adopting CRA’s interpretation could lead to an absurd result that slow processing of applications could prevent employees from making the election. It was therefore appropriate to adopt the broader interpretation that the employee had a CPP retirement benefit payable to him when he filed the election due to the CPP benefits paid retroactive to a date prior to the election. The employer was therefore not required to withhold CPP for the years under appeal.

ACTION: If aged 65 and earning pensionable employment, consider whether an election should be made to opt out of contributions.

New Business Registration Number Process: Shift Online

Effective November 3, 2025, most new CRA business number registrations, including adding new program accounts to existing business numbers, must be done online through CRA’s Business Registration Online (BRO) system. Calls to the CRA business enquiries phone line will be directed to the BRO webpage. CRA has noted the following situations where online registration cannot be used:

• reactivating a previously closed account;
• registering a Canadian business with only non-resident owners; and
• registering a business owned by another business (e.g. a partnership or corporation).

In these situations, registration must be done by calling the business enquiries phone line or by paper filing.

ACTION: If registering for a new CRA business number, ensure the proper process is followed.

Withholding Tax on Rent Paid to Non-Residents: Some Relief

Amounts paid to a non-resident as rent for the right to use property in Canada, including rent for the use of residential real estate, are generally subject to withholding tax. Such amounts must be remitted to CRA.

Recent legislative amendments would provide an exception from this withholding requirement in certain cases. The effective date of this change is August 12, 2024. CRA has indicated that they are administering this proposal, even though it has not yet been passed into law (as of January 1, 2026).

Individuals would not have to withhold tax in respect of an amount paid or credited to non-resident persons as rent for the use of a residential property in which an individual resides (whether or not that individual is the one paying the rent). This exception from withholdings also applies where the rent paid was for a residence of a deceased individual, the payment was made within 36 months of the individual’s death and the rent was paid by a graduated rate estate (GRE).

If the exception applies, the non-resident person would be required to remit and report (in prescribed form) the withholding, assuming that an agent of the non-resident was not already required to do so.

All rents paid on Canadian real estate to a non-resident that do not fit within the specific terms of these exceptions (e.g. paid by a trust that was not a GRE) would continue to require withholdings and reporting by the tenant.

ACTION: Review whether rent paid to a non-resident landlord would qualify for this exception from withholding tax.

Real Estate: Nominee or Owner?

In a November 7, 2025 French Court of Quebec case, the taxpayer was assessed with business income of $284,661 in 2015 related to the sale of a house built on land she owned.

The taxpayer argued that she acted as a nominee for her former spouse, who allegedly carried out the project, and, as such, the taxpayer did not need to report the income from the sale (her former husband would have had to report the income). She stated that, to reduce taxes as a couple, the land and the house were put solely in her name as she had little income at the time. While the taxpayer was with her former spouse at the time of the transaction, they separated shortly afterwards.

Revenu Québec (RQ) argued that the taxpayer was the project’s true owner and beneficiary.

The house was sold for $545,000, financed with $245,000 in cash and a second house valued at $300,000, which was later resold. The divorce agreement between the taxpayer and her former spouse provided that the net proceeds from the sale of the second house would be split 20.2% to the taxpayer and 79.8% to the former spouse.

Taxpayer loses
The Court noted the taxpayer knowingly and actively participated in the project as an owner: the land and property were registered in the taxpayer’s name alone, she applied for and obtained the building permit, she contributed financially to the project and she helped choose material, colour and decor. Further, during the taxpayer’s divorce, she acted as the sole owner and not a nominee. Finally, there was no written or other evidence of a nominee arrangement.

The Court found that the tax planning to minimize the couple’s income tax was a deliberate decision; the taxpayer could not later deny ownership. The Court further found that the taxpayer and her former spouse’s divorce agreement had no effect on the tax treatment of the proceeds of the property.

The Court stated that taxpayers should be taxed for what they did, not for what they intended to do. As such, it is not up to the Court nor RQ to apportion the taxable proceeds to the former spouse: it will be up to the taxpayer and her former spouse to take those steps.

The Court ruled that the taxpayer was the true owner of the property and therefore should have reported the full gain on the disposition.

ACTION: Ensure to properly report income and/or gains generated on assets for which you are the beneficial owner.

Payments for Right to Acquire a Home: Beneficial Ownership

In a recently released November 20, 2023 Technical Interpretation, CRA considered whether a resident participating in a housing agreement involving regular payments towards a future option to buy a property held beneficial ownership or a leasehold interest for purposes of the principal residence exemption (PRE).

The agreement allowed the taxpayer to occupy the unit and make monthly payments, some of which increased their investment (the “interest”) in the property. The resident would eventually be able to purchase the property at fair market value and apply the accumulated interest as a down payment. The interpretation addressed whether a gain on repayment of this interest could be sheltered by the PRE.

Beneficial ownership

CRA noted that beneficial ownership is a common law concept based on rights such as possession, control and the ability to transfer title, as well as bearing obligations such as paying property taxes. While the taxpayer had exclusive possession and bore some financial risk, CRA found that the taxpayer lacked critical elements of ownership, such as control over mortgaging, the right to rent or make structural changes without approval and ultimate responsibility for property expenses. Thus, CRA concluded that the taxpayer did not have beneficial ownership and therefore did not “own” the property for purposes of the PRE.

Leasehold interest

Gains on dispositions of leasehold interests can be eligible for the PRE. CRA acknowledged that a lease likely existed but clarified that the amount paid to the taxpayer upon termination of the agreement was not to compensate for lease termination, but rather was tied to the taxpayer’s accrued interest. As such, any gain on the repayment of this interest would not be eligible for the PRE, as it would not be a disposition of a qualifying property.

Sale of Shares in Error: Careful!

In a September 23, 2025 French Court of Quebec case, an individual accidentally sold shares, triggering a $67,362 capital gain, while reviewing his stock portfolio on his phone while on pain medicine in the hospital. Realizing his error the next day, he immediately repurchased the shares.

The taxpayer argued that there was no sale of shares as he accidentally pressed the button to confirm the sale. He also argued that, as CRA determined that the capital gain rollover provisions on the disposition of eligible small business corporation shares and acquisition of replacement shares applied, Revenu Québec (RQ) should come to the same conclusion.

Taxpayer loses
The Court found that, although unintentional, the taxpayer sold the shares and therefore realized the capital gain.

The Court further found that RQ’s denial of the rollover provision was correct. It was unclear why CRA allowed the deferral as it is only applicable on the disposition and acquisition of certain CCPC shares. A decision by CRA is not binding on RQ.

ACTION: Selling an asset, even if an accident, can trigger tax consequences.

December 31, 2025 is fast approaching… see below for a list of tax planning considerations. Please contact us for further details or to discuss whether these may apply to your tax situation.

• In 2024, the government proposed to increase the taxable portion of capital gains from 50% to two-thirds. However, the proposal did not proceed. As a result, the existing rule remains in place: only 50% of capital gains are taxable.
• A senior whose 2025 net income exceeds $93,454 will lose some or all of their old age security Seniors will also begin to lose their age credit if their net income exceeds $45,522. Consider limiting income over these amounts, if possible. Alternatively, deferring receipt of old age security amounts (for up to 60 months) may be beneficial if it would otherwise be eroded due to high income levels.
• Canada pension plan (CPP) receipts may be split between spouses aged 65 or over (application to CRA is required). Also, it may be advantageous to apply for CPP early (age 60-65) or late (age 65-70).
• Consider triggering capital losses at year-end to offset capital gains. Net capital losses that cannot be used in the current year can be carried back three years or forward indefinitely.
• Looking to sell your business? Several tax-efficient options These include the ability to shelter up to $1.25 million in capital gains under the lifetime capital gains exemption (indexed starting in 2026), updated and broadened intergenerational transfer rules for sales to children, a deferral of capital gains when proceeds are reinvested in a new business, and the use of employee ownership trusts for sales to employees. Effective dates for these incentives vary.
• Consider restructuring your investment portfolio to convert non-deductible interest into deductible interest. It may also be possible to convert personal interest expense, such as interest on a house mortgage or personal vehicle, into deductible interest.
• If you have equity investments or loans to a Canadian small business that has become insolvent or bankrupt, an allowable business investment loss (ABIL) may be available. For loans to corporations to be eligible, the borrower must act at arm’s length. ABILs can offset income beyond capital gains, such as interest, business or employment income.
• If a commercial debt you owe (generally a business loan) has been forgiven, special rules apply that may result in additional taxes or other adjustments to the tax return.
• Certain expenditures made by individuals by December 31, 2025 will be eligible for tax deductions or credits, including digital news subscriptions, moving expenses, multigenerational home renovation expenditures, childcare expenses, charitable donations, political contributions, registered journalism organization contributions, medical expenses, alimony, eligible employment expenses, union, professional or like dues, carrying charges and interest expense. Ensure you keep all receipts related to these expenses.
• If you own a business or rental property, consider making any necessary capital asset purchase by the end of the year. As long as the asset has been received and is available for use by year-end, a full year of depreciation may be claimed. There are also several assets that may be eligible for enhanced depreciation.
• Expenses incurred to earn short-term rental income are not deductible for tax purposes when the rental operation is not compliant with the applicable provincial or municipal licensing, permitting or registration requirements. If the operation is compliant for only a portion of the rental period, deductions will generally be denied on a pro-rata basis.
• You have until March 2, 2026, to make tax-deductible registered retirement savings plan (RRSP) contributions for the 2025 year. Consider having the higher-income earner contribute to their spouse’s RRSP via a spousal RRSP for greater tax savings.
• Individuals should consider contributing to their tax-free savings account (TFSA). An additional $7,000 may be contributed starting on January 1, 2026. Consider a catch-up contribution if you have not contributed the maximum amount for prior years.
• Consider using the home buyers’ plan (HBP) to withdraw up to $60,000 from your RRSP to fund the purchase of your first home. Taxpayers must repay the amounts withdrawn under the HBP over a 15-year period. For withdrawals between January 1, 2022 and December 31, 2025, the 15-year period has been temporarily deferred, such that it now starts with the fifth year following the year the first withdrawal was made.
• Consider contributing to a tax-free first home savings account (FHSA). Eligible contributions are deductible, and withdrawals to purchase a first home are not taxable. Up to $8,000 can be contributed annually to a maximum lifetime limit of $40,000. Contributions made in 2025 and unused contributions from 2024 can be deducted against 2025 income.
• NEW! If buying a first home on or after March 20, 2025 valued at less than $1.5 million, you may be eligible for a GST rebate (or rebate of the federal portion of the HST). The law permitting this rebate has not yet passed. Applications for the rebate may be made if and when it receives Royal Assent.
• A Canada education savings grant for registered education savings plan (RESP) contributions equal to 20% of annual contributions for children (maximum $500 per child per year) is available. In addition, lower-income families may be eligible for the Canada learning bond.
• A registered disability savings plan (RDSP) may be established for a person under 60 eligible for the disability tax credit. Non-deductible contributions to a lifetime maximum of $200,000 are permitted. Grants, bonds and investment income earned in the plan are included in the beneficiary’s income when paid out of the RDSP.
• NEW! If eligible for the disability tax credit, consider applying for the income-sensitive Canada disability benefit, which provides up to $2,400/year in support to individuals aged 18 to 64. The first payments for this benefit commenced in July 2025.
• Are you a S. resident, citizen or green card holder? Consider U.S. filing obligations concerning income and financial asset holdings. Filing obligations may also apply if you were born in the U.S.

Information exchange agreements have increased the flow of information between CRA and the IRS. Collection agreements enable CRA to collect amounts on behalf of the IRS.

• If income, forms or elections have been missed in the past, a voluntary disclosure to CRA may be available. The program was recently updated to provide relief from some or all interest and penalties, although the tax itself must still be paid.

2025 REMUNERATION

Higher personal income is taxed at higher rates, while lower income is taxed at lower rates. Therefore, individuals may want to, where possible, shift income from high-income years to low-income years. This is particularly useful if the taxpayer is expecting a large fluctuation in income due to, for example, an impending:

• maternity/paternity leave;
• large bonus/dividend; or
• sale of a company or investment assets.

In addition to increases in marginal tax rates, individuals should consider other costs of additional income. For example, an individual with a child may receive reduced Canada child benefit (CCB) payments. Likewise, excessive personal income may reduce the receipt of OAS, GIS, GST/HST credit and other provincial/ territorial programs.

There are various ways to smooth income over several years to ensure an individual is maximizing access to the lowest marginal tax rates. They include:

• taking more or less earnings out of the corporation (in respect of owner-managed companies);
• realizing capital gains/losses by selling investments;
• deciding whether to claim RRSP contributions made in the current year or carry forward the contributions;
• withdrawing funds from an RRSP to increase income (however, care should be given to the loss in the RRSP room based on the withdrawal); and
• deciding whether to claim CCA on assets used to earn rental/business income.

Note that dividends paid to shareholders of a corporation that do not meaningfully contribute to the business may result in higher taxes due to the “tax on split income” rules.

Year-end planning considerations not specifically related to changes in income levels and marginal tax rates include:

1) Corporate earnings in excess of personal requirements could be left in the corporation to obtain a tax deferral (the personal tax is paid when cash is withdrawn from the company).

The effect on the qualified small business corporation status should be reviewed before selling the shares where large amounts of capital have accumulated.

2) Access to the corporate federal small business deduction is reduced where more than $50,000 of passive income is earned in the corporation. Consider whether it is appropriate to remove passive income-generating assets from the corporation and whether a shift in the types of passive assets held is appropriate. In some provinces, it may actually be beneficial to have access to the federal small business deduction reduced. As many variables affect these decisions, consultation with a professional advisor is suggested.

3)    If dividends are paid out of a struggling business with a tax debt that cannot be paid, the recipient could be held liable for a portion of the corporation’s tax debt up to the value of the dividend.

4)    Individuals who wish to contribute to the CPP or an RRSP may require a salary to generate earned income. RRSP contribution room increases by 18% of the previous year’s earned income, up to a yearly prescribed maximum ($32,490 for 2025).

5)    Consider paying taxable dividends to obtain a refund from the refundable dividend tax on hand account in the corporation. The refund amount may be restricted if eligible dividends are paid. Eligible dividends are subject to lower personal tax rates.

6)    If you provide services to a small number of clients through a corporation (that would otherwise be considered your employer), CRA could classify the business as a personal services business. There are significant negative tax implications of such a classification. In Budget 2025, the federal government indicated that an enforcement project on these situations, starting with the trucking industry, would be commenced. Consider discussing risk and exposure minimization strategies (such as paying a salary to the incorporated worker) with a professional advisor in such scenarios.

The voluntary disclosures program (VDP) provides taxpayers with a chance to correct past tax errors or omissions before CRA finds them. If CRA accepts a disclosure, taxpayers may receive some penalty and interest relief and will not be referred for criminal prosecution. Any taxes owing will still have to be paid by the taxpayer in full.

The VDP has been significantly changed, effective for disclosures submitted on or after October 1, 2025.

Some quick points to consider…

• The government has proposed to reduce the tax rate on the lowest bracket to 14% (from 15%) effective July 1, 2025, resulting in reduced tax for many individuals. This change would be implemented as a 14.5% rate for 2025 and 14% for 2026 onwards. However, the rate for personal tax credits would likewise be reduced, resulting in lower tax credits. Employers were expected to implement this change on a best effort basis for the first pay of July 2025.
• Applications for the new Canada disability benefit are now open and can be made through an electronic application portal, by phone or in person at a Service Canada centre. This is an income-tested benefit intended for working-age people who are approved for the disability tax credit.
• CRA launched a new self-evaluation and learning tool link (SELT) to help taxpayers assess eligibility for penalties and interest relief due to financial hardship, circumstances beyond the taxpayer’s control, actions of CRA or other reasons.
• The government has reiterated that the Canada carbon rebate for small businesses should be tax-free, retroactive to the start of the program (available in AB, SK, MB, ON, NB, NS, PEI and NL). Draft legislation has been released. Once it receives Royal Assent, CRA will be authorized to process amended T2 corporation income tax returns for businesses that previously included the rebate in their taxable income.

Some quick points to consider…

• CRA has been significantly delayed in posting several tax slips to its online portal this year. Adjustments to filed personal tax returns may be needed to report income that was missed.
• Individuals reporting capital gains have until June 2, 2025 to file their income tax returns and make associated payments without being subject to penalties or interest.
• An individual may claim a charitable donation tax credit for their spouse or common-law partner’s gift made within the past five years, even if the donation predates their spousal relationship.
• A parking space may be a component of a condominium unit for principal residence exemption purposes, even if it was purchased separately from the unit.
• On April 1, 2025, the HST rate in Nova Scotia dropped to 14% (from 15%). Ensure to update the HST charged for sales in or to this jurisdiction.

December 31, 2024 is fast approaching… see below for a list of tax planning considerations. Please contact us for further details or to discuss whether these may apply to your tax situation.

1) NEW! As of June 25, 2024, 2/3s of capital gains in excess of $250,000 per year are proposed to be taxable. Capital gains of $250,000 or less will effectively continue to be included at a 50% rate due to a new deduction.

Tax Tidbits

Some quick points to consider…

• All GST/HST returns (except for those of charities and selected financial institutions) must now be filed electronically using methods such as NETFILE, internet file transfer through a third-party accounting software, CRA’s My Business Account, electronic data interchange (EDI) through a financial institution or TELEFILE through a toll-free phone number. Registrants who paper file improperly will be charged a penalty.
• Starting in 2024, digital platform operators (such as Airbnb and Etsy) are required to provide information to CRA on the sellers who use their platform, including the seller’s identification and details of their financial transactions.
• Over 2.1 million people have registered for the Canadian Dental Care Plan (CDCP). Almost 12,000 oral health providers have formally registered to provide services to patients under the plan. Providers can now provide services without formally registering, provided they bill Sun Life directly for eligible services.

Some quick points to consider…

• All eligible Canadian resident seniors (over age 65), children under 18 and individuals eligible for the disability tax credit can now apply for the Canadian Dental Care Plan. Other eligible individuals will be invited to participate in 2025. To qualify, the applicant must not have access to dental insurance and the applicant’s family income must be below $90,000.
• In July 2024, CRA began issuing legal warnings and taking legal measures to collect outstanding personal COVID-19 benefit program debts. Individuals who have not responded or cooperated are being contacted if CRA has determined that they have the financial capacity to pay the outstanding amount. CRA encouraged individuals who cannot pay the full amount immediately to contact them and develop a payment arrangement.
• While the increase to the capital gains inclusion rate from 50% to 2/3 for corporations and most trusts and from 50% to 2/3 on the portion of capital gains realized in the year that exceeds $250,000 for individuals has not been enacted into law, the government has confirmed that the change would be effective June 25, 2024.

The 2024 Federal Budget proposed to increase the capital gains inclusion rate from 50% to 2/3 of the actual gain, effective for capital gains realized on or after June 25, 2024, for all taxpayers (including corporations and trusts) other than individuals. Individuals would be able to continue to access the 50% rate on the first $250,000 of capital gains (net of gains offset by capital losses, the lifetime capital gains exemption, and the proposed employee ownership trust exemption and Canadian entrepreneurs’ incentive) realized annually. An individual’s capital gains over the annual $250,000 limit, and all capital gains of corporations and trusts would be included at the 2/3 rate. Full details of the proposal have not yet been released (as of May 13, 2024).

A. Personal Measures

Capital Gains Inclusion Rate

Currently, one half of capital gains are included in a taxpayer’s income. Budget 2024 proposed to increase this inclusion rate to two thirds of the actual gain, effective for capital gains realized on or after June 25, 2024. Similarly, the deduction available for some employee stock option benefits will be reduced from one half to one third of the benefit. This adjustment to the inclusion rate will also apply to capital losses applied to offset capital gains.