The Canada Revenue Agency this week made a somewhat extraordinary request, asking some taxpayers to delay filing their T1 and T3 returns. This is a departure from the CRA’s usual advice to file by the tax deadline—or sooner.

Specifically, the Agency has informed taxpayers who will be reporting a capital disposition on either of those returns that they will need to wait to file as it continues to update systems to reflect the reversion to the one-half capital gains inclusion rate. The rate was poised to increase to two-thirds on all capital gains realized by corporations and most trusts, and on annual capital gains realized by individuals in excess of $250,000. Implementation of the capital gains inclusion rate increase was recently postponed to January 1^st, 2026.

The CRA has not specified when its systems would be updated, but said the changes should be made “in the coming weeks.” As such, individual taxpayers reporting capital dispositions will have until June 2^nd, 2025, to file their income tax and benefit return without risk of late-filing penalties and interest, while trust-filers will have until May 1^st, 2025, to file with the same relief.  As we noted previously, these extensions had already been granted, but only this week did the CRA officially request that affected taxpayers not file their T1 and T3 returns until system changes could be implemented.

Both incoming Prime Minister Mark Carney and Conservative leader Pierre Poilievre have stated their intention to cancel the capital gains inclusion rate hike if elected. In the meantime, many taxpayers have expressed confusion over the fate of the proposed measure. While affected taxpayers have been granted a filing extension, a recommended best practice is to prepare tax returns far in advance of the filing deadline to avoid delays and potential penalties and arrears interest (even with the extra time to file).

Prescribed rates mostly unchanged for Q2 2025

The Canada Revenue Agency recently announced the prescribed annual interest rates for the second quarter of 2025. The rates—which will be in effect from April 1^st, 2025 to June 30^th, 2025—remain largely unchanged for Q2 following a series of quarterly decreases.

The prescribed rates apply to amounts owed to the CRA and amounts owed by the CRA to individuals and corporations. Rates applying to income tax will be the following:

• On overdue taxes, Canada Pension Plan contributions and employment insurance premiums: 8 per cent (unchanged from Q1 2025)
• On corporate taxpayer overpayments: 4 per cent (unchanged from Q1 2025)
• On non-corporate taxpayer overpayments: 6 per cent (unchanged from Q1 2025)
• On rates used to calculate taxable benefits for employees and shareholders from interest free and low-interest loans: 4 per cent (unchanged from Q1 2025)
• On corporate taxpayers’ pertinent loans or indebtedness: 7.08 per cent (a decrease from 7.78 per cent in Q1 2025)

Trust reporting requirements for the 2024 tax year

While bare trusts are not required to file a T3 Income Tax and Information Return and Schedule 15 (Beneficial Ownership Information of a Trust) for the 2023 and 2024 tax years (unless requested), the Canada Revenue Agency recently issued a reminder clarifying that enhanced trust reporting rules for the 2024 tax year are being administered. The rules apply to trusts with tax years ending on or after December 31^st, 2023. These affected trusts will be required to file a T3 return with Schedule 15.

Recent trust compliance amendments have left many taxpayers confused as to their reporting obligations for 2024 and subsequent tax years. As mentioned above, trusts reporting capital dispositions will have until May 1^st, 2025, to file T3 information returns (slips) and the T3 return. The typical trust filing deadline is 90 days after the trust’s tax year-end.

Failure to comply with trust filing requirements can result in significant penalties and interest. As always, work with the RH Partners Tax team to meet your trust filing obligations well in advance of the filing deadline.

The RH Partners Tax Team

For more information on tax planning and compliance, contact a member of the RH Partners Tax team today.