In this blog post, we will outline upcoming tax changes for 2025 and personal, self-employed, and corporate tax deadlines for 2025. We will start with a discussion on the changes and then end with the tax deadlines.

2025 Canadian Tax-Brackets

The federal tax brackets and personal tax credit amounts will increase in 2025 by 2.7%, except for the $150,000 and $220,000 bracket amounts, which are not indexed for inflation. The Ontario tax brackets and personal tax credit amounts are increased for 2025 by 2.8%. Please note that the tax rates have not changed however, the tax brackets have changed. You can refer to the table below for the upcoming changes. 

2025 Canada Pension Plan (CPP) Limit

The maximum pensionable earnings under the CPP will rise to $71,300 in 2025, up from $68,500 in 2024. The maximum self-employed CPP contribution for 2025 will rise to $8,068.20 up from $7,735 in 2024. 

For employers, the CPP contribution will rise to $4,034.10 in 2025, up from $3,867.50 in 2024. You can see the full details outlined here.

Tax-Free Savings Account (TFSA) limit for 2025

The annual contribution limit for the TFSA will be $7,000 in 2025 (same as 2024), bringing the total cumulative contribution room to $102,000 for individuals who have been eligible since the TFSA’s inception and have never contributed.

Home Buyers’ Plan Enhancement for 2025

The maximum individual withdrawal limit under the Home Buyers’ Plan is proposed to increase to $60,000 from the previous $35,000, with a 15-year repayment period beginning five years after the initial withdrawal for withdrawals made between January 1, 2022, and December 31, 2025.

Proposed Capital Gains Changes for 2025

As of December 9, 2024, the proposed increase to Canada’s capital gains inclusion rate has not yet been enacted into law. 

The legislative process has involved the introduction of a Notice of Ways and Means Motion and the release of draft legislation. Despite these steps, the amendment has not received Royal Assent, leaving its final implementation uncertain. Political factors, such as potential changes in government due to an election, could further influence the outcome.

Taxpayers should stay informed about the status of this legislation, as its enactment will directly impact the taxation of capital gains. Consulting with a tax professional is advisable to navigate potential changes and to plan accordingly.

As a reminder, the proposed capital gains changes are as follows as of June 25, 2024 and later:

• • 66.67% (2/3) inclusion rate for capital gains for corporations and trusts
  • 66.67% (2/3) inclusion rate for individuals for capital gains in excess of $250,000 in the year

Lifetime Capital Gains Exemption for 2025

Along with the proposed capital gains changes outlined above, the government has also proposed changes to the Lifetime Capital Gains Exemption (LCGE), which are pending legislative approval.

The LCGE allows individuals to shelter a portion of capital gains from taxation upon the sale of qualified small business corporation shares or qualified farm and fishing properties. As of June 25, 2024, this exemption is set at $1,250,000, up from the previous $1,016,836.

GST Holiday

The Canadian government proposed a temporary suspension of the Goods and Services Tax (GST) and Harmonized Sales Tax (HST) on specific essential goods to provide financial relief to consumers during the holiday season. 

This initiative, pending parliamentary approval, is designed to alleviate financial pressures amid rising living costs and provide tax relief during the holiday season and includes items such as children’s clothing, toys, and restaurant meals.

Duration

The proposed GST/HST exemption is set to be in effect from December 14, 2024, to February 15, 2025.

Eligible Items for Tax Exemption

The tax relief targets a range of essential and holiday-related goods, including:

• Prepared Foods: Items such as vegetable trays, pre-made meals, salads, sandwiches, and similar ready-to-eat products.
• Restaurant Meals: All meals purchased from restaurants, applicable to dine-in, takeout, and delivery services.
• Snacks: Products like chips, candy, granola bars, and other snack foods.
• Beverages: Includes beer, wine, cider, and pre-mixed alcoholic beverages with an alcohol content below 7% ABV.
• Children’s Essentials: Children’s clothing and footwear, car seats, diapers, and toys such as board games, dolls, and video game consoles.
• Reading Materials: Books, print newspapers, and puzzles suitable for all ages.
• Holiday Decorations: Christmas trees and similar decorative items.

You can see the full list here.

Canadian Tax Deadlines for 2025

Individuals:

• • For the 2024 tax year, individual tax returns are due by April 30, 2025. 

Self-Employed Individuals:

• • If you or your spouse/common-law partner are self-employed, the filing deadline extends to June 16, 2025 (since June 15 falls on a Sunday). However, any taxes owed must still be paid by April 30, 2025, to avoid interest charges.

Corporations:

• • Filing Deadline: A corporation’s income tax return is due six months after the end of its fiscal year. For instance, if the fiscal year ends on December 31, 2024, the return is due by June 30, 2025. However, any taxes owed must still be paid withing two months after fiscal year end.

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The accounting and tax information provided in this post does not constitute advice and is meant to be for general information purposes only. The information is current as at the date of this post and does not reflect any changes in accounting and/or tax legislation thereafter. Moreover, the information has been prepared without considering your company or personal financial/tax circumstances and/or objectives.