Annual Message From The Partners
Tax season has a way of sneaking up on all of us, and with it comes another year of questions, decisions, and opportunities. While the rules and forms may change, one thing doesn’t: we genuinely enjoy working with you and being part of your journey.
Over the past year, we’ve had the privilege of helping clients navigate growth, change, and everything in between. Our role is to bring clarity where things feel complicated, keep you on the right side of the rules, and help you make informed choices—without unnecessary stress or surprises.
We value the relationships we’ve built and the trust you place in us. As we head into the months ahead, we look forward to reconnecting, catching up, and guiding you through another tax season.
Thank you for choosing to work with us. In a world full of options, we’re glad you’ve chosen our team.
Warm regards,
Steve, Ana, Girija, Eric and Daniel
Capital Gains Update (current filing position for 2025)
For 2025 return preparation, the one-half capital gains inclusion rate applies. Following the January 31, 2025 deferral announcement and the March 21, 2025 cancellation announcement, the government confirmed it will not proceed with the previously proposed increase to the inclusion rate. CRA materials reflect this approach, and updated forms are aligned with the one-half inclusion rate treatment.
Alternative Minimum Tax (AMT) (in effect)
The AMT framework continues to apply for 2025, with no new structural redesign. The key year-over-year change is indexation of the AMT basic exemption, which increased from $173,205 (2024) to $177,882 (2025). The federal AMT rate remains 20.5%.
New Ontario Fertility Treatment Tax Credit (OFTTC) (in effect)
Ontario introduced a new refundable fertility treatment tax credit for 2025 and later taxation years. The credit equals 25% of eligible expenses, up to a maximum annual credit of $5,000 (based on up to $20,000 of eligible expenses). Eligible expenses must be for fertility/surrogacy-related goods and services provided entirely in Canada. The credit applies to expenses paid on or after January 1, 2025. Only one spouse/partner can claim the OFTTC for the year and the expenses must not be reimbursed.
Carbon-related changes (in effect)
The federal fuel charge ended April 1, 2025, and CRA has indicated final Canada Carbon Rebate payments to individuals were issued in April 2025.
Canadian Entrepreneurs’ Incentive (CEI) (previously announced, currently not proceeding)
The CEI was announced in Budget 2024 as a proposed relief measure for qualifying business dispositions that, subject to conditions, would have reduced the effective capital gains inclusion on eligible amounts. Budget 2025 confirms a list of previously announced measures the government intends to proceed with; CEI is not included on that list. Accordingly, CEI relief should not be relied upon for 2025 planning unless reintroduced through future legislation
Lifetime Capital Gains Exemption (LCGE) (proposed – CRA administering)
CRA’s current 2025-filing guidance continues to reflect the increased LCGE amount (to $1,250,000) for eligible dispositions, pending enactment.
Disability Supports Deduction (DSD) (proposed – CRA administering)
This measure was originally announced in Budget 2024 and proposed to apply for the 2024 and subsequent taxation years. Budget 2025 did not introduce a new DSD redesign; rather, it confirmed the government’s intention to proceed with previously announced measures, including the August 12, 2024 DSD proposals. The scope appears consistent with the 2024 framework, including specified assistive and accessibility-related expenses. Given legislative status, this remains best described as a proposed measure that CRA is administering for filing purposes.
Mineral Exploration Credits (METC and CMETC) (proposed – CRA administering)
The federal Mineral Exploration Tax Credit (METC) is a 15% credit for eligible flow-through share investors. Following its prior extension to March 31, 2025, the government has proposed a further two-year extension, to flow-through share agreements entered into on or before March 31, 2027.
Budget 2025 also proposes to expand the 30% Critical Mineral Exploration Tax Credit (CMETC) by adding 12 minerals for eligible flow-through share agreements entered into after Budget Day (November 4, 2025) and on or before March 31, 2027.
Underused Housing Tax (UHT) – proposed elimination for 2025 (proposed – pending enactment)
Budget 2025 proposes to eliminate the UHT for the 2025 and subsequent calendar years (i.e., no UHT payable and no UHT returns for those years). As of now, these changes are contained in Bill C-15 and remain subject to Parliamentary approval and Royal Assent. UHT filing/payment obligations for 2022 to 2024 (including related penalties and interest) continue to apply.
Personal Support Workers Tax Credit (proposed – future years)
Budget 2025 proposes a temporary refundable credit for eligible personal support workers equal to 5% of eligible earnings, up to $1,100 per year, for the 2026 to 2030 taxation years. Amounts earned in jurisdictions already covered by bilateral wage agreements are excluded. This measure remains subject to legislative enactment.
Farnham Expense Template
For our applicable clients, we have provided a template which will assist you with the summarization of your business expenses to be reported on your personal tax return. The new template will minimize possible errors and improve efficiency during the preparation of your tax returns. Please enter the expenses in the excel spreadsheet, which can be downloaded from our website, and submit to us along with your tax documents. You can download the template here. If there are any questions regarding how to complete the template, please connect with your Farnham representative.
Reminders
Filing Deadlines
Personal tax returns and any balance owing is due Thursday April 30th.
Self-employed individuals and their partners’ filing due date is Monday June 15th, however any balance owing is due April 30th.
Interest and Penalties on Unpaid Taxes
Unfiled taxes see penalties of 5% on the balance owing plus an additional 1% for each full month after the filing deadline up to a maximum of 12 months. If, however, you were late in filing in any 3 past years and receive a demand to file request the penalty on the balance owing is now 10% plus 2% for each full month after the filing deadline to a maximum of 20 months.
In addition to filing penalties, unpaid taxes are subject to CRA prescribed arrears interest, compounded daily. The prescribed rate is set quarterly (currently 7% for January 1 to March 31, 2026).
RRSP Contributions
March 2nd is the RRSP contribution deadline. Any contributions made between January 1st, 2026, to March 2nd, 2026, can be deducted in either 2025 or 2026 tax filings, subject to your RRSP room available. Review your 2024 Notice of Assessment for your available room, or check online with CRA “My Account”, if registered. An overcontribution above $2,000 will trigger a 1% monthly penalty.
TFSA Contributions
Canadian residents over 18 years of age can open a tax-free-savings account (TFSA). The annual limit is $7,000 for 2025 and $7,000 for 2026. At any time in the year, if you overcontribute to the TFSA you will be taxed at 1% of the highest excess in the month for each month you are in excess.
FHSA Contributions
Canadian residents aged 18 or older who are first-time homebuyers can open a First Home Savings Account (FHSA). The annual contribution limit is $8,000, with a lifetime cap of $40,000. Contributions are tax-deductible, and withdrawals for a qualifying home purchase, including investment growth, are tax-free. Unused contribution room carries forward up to $8,000 per year.
Late Slips
Typically, T3 (trust) and T5013 (partnership) slips are not issued until the end of March and foreign slips can be even later. If you receive a late or amended slip after filing, please notify us as soon as possible to amend your return. The CRA’s matching program will identify any missing slips and impose penalties.
Paying CRA
Three payment options:
- Pre-Authorized Debit (PAD): A one time draw directly from your bank account on a specified withdrawal date. The PAD form must be filed at least 5 days before the withdrawal date and therefore must be submitted by April 23rd to meet the April 30th deadline.
- Online: Sign-in through your financial institution and add CRA as a payee. Your account number would be your 9-digit SIN.
- Remittance Voucher: We can issue a voucher that you can mail with a cheque or take to your bank for a direct transfer.
Note: Payments made after 2023, section 160.5 of the income tax act, requires remittances over $10,000 to be paid electronically unless the remitter cannot reasonably pay in that manner. A penalty of $100 will apply for failure to remit electronically, however it is anticipated that there will be a grace period before the penalty is imposed.