The 2024 tax season is officially here, with the Canada Revenue Agency accepting 2024 income tax returns this week. It would be an understatement to say this has been an unusual tax season, with political uncertainty in Ottawa and a recent series of policy reversals and relief announcements by the Department of Finance and the Canada Revenue Agency.

Those changes have caused confusion among taxpayers and preparers, with the need for clarification on certain key tax filing requirements. Here are the latest updates:

Capital gains penalty relief for corporations no longer applies

The CRA’s announcement that it would no longer administer the capital gains inclusion rate increase was welcomed by taxpayers. The proposed change—which is now scheduled to take effect on January 1^st, 2026, assuming no further policy shifts by the federal government—would increase the capital gains inclusion rate to two-thirds from one-half on all capital gains realized by corporations and some trusts, and on annual capital gains realized by individuals in excess of $250,000.

As we noted previously, the Department of Finance then announced that it would allow individuals who are reporting capital dispositions for the 2024 tax year an extension to June 2nd, 2025, to file their T1 returns without arrears interest or late-filing penalties. T3 trust filers with capital dispositions for the 2024 tax year now have until May 1st, 2025, to file their returns with the same relief. This applies to both T3 slips and returns. The CRA later issued a statement clarifying that penalty and interest relief for corporations is no longer in effect. The agency provided the following explanation in response to questions posed by the Chartered Professional Accountants of Canada:

“As the capital gains rate change is now proposed to be effective January 1, 2026, corporations can continue to use existing forms and tax software to file using the one-half inclusion rate until further notice. Penalty and interest relief was originally announced for those corporations with a filing due date on or before March 3, 2025, to allow time for corporations to work through the new forms which were expected to be published on January 31, 2025. As forms for the T2 Corporation Income Tax Return related to the capital gains inclusion rate are not being revised at this time, there is no longer a basis for providing relief.”

Tax forms may be delayed

Before the announcement that the CRA would no longer be implementing the capital gains inclusion rate increase, the agency was in the process of amending tax forms to reflect the hike to the new two-thirds rate. That process was supposed to be completed by January 31^st, 2025. The policy reversal meant that the tax forms would then need to revert back to their original version that reflected the one-half rate. The CRA says this policy change may cause a delay in providing updated tax forms, which are to be completed “… in the coming weeks.”

While the filing deadline extension mitigates much of the penalty and interest arrears risk for taxpayers, it’s worth noting this potential delay. As always, the best practice is to work with your accounting firm or tax preparer to file your taxes in a timely manner, well ahead of the deadline.

Tax return filing deadline relief

As noted above, the CRA has provided filing relief for various tax and information returns, including:

T1: Relief from late-filing penalties and interest arrears for affected filers (e.g., T1 filers with capital dispositions) if the return is filed on or before June 2^nd, 2025. The T1 due date would have been April 30^th, 2025. The T1 due date for self-employed taxpayers is June 16^th, 2025.

T2: No exemption from late-filing penalties and interest arrears. T2 returns must be filed six months after a corporation’s fiscal year-end.

T3 returns and T3 information return slips: Relief from late-filing penalties and interest arrears for ‘impacted T3 trust filers’ if the return is filed on or before May 1^st, 2025. The usual due date is 90 days after a trust’s year end.

T4, T4A, T5 information return slips: Relief from late-filing penalties if filed on or before March 7^th, 2025. The filing date for these returns would have been February 28^th, 2025.

T4PS and T5008 information return slips: Relief from late-filing penalties if filed on or before March 17^th, 2025. The filing date for these returns would have been February 28^th, 2025.

Other tax changes for 2024

• The Alternative Minimum Tax rate and the basic exemption threshold have been increased for 2024 and later tax years. As the CRA notes, “ … there are also changes to the calculation of adjusted taxable income for AMT purposes, the special foreign tax credit, and the minimum tax carryover. The changes limit the value of most non-refundable tax credits.
• To qualify for eligible federal deductions on short-term rental income, short-term rental properties must now comply with applicable provincial or municipal registration, licensing and permit requirements.

• The Home Buyers’ Plan withdrawal limit has been increased to $60,000 from $35,000 for withdrawals made after April 16, 2024. The 15-year repayment requirement under the program has been extended by three years “for participants making a first withdrawal between January 1, 2022, and December 31, 2025.” The 15-year repayment period starts in the fifth year following the year that a participant makes their first withdrawal.
• Digital platform operators are now required “… collect and report information on sellers using their platform to sell goods or provide certain services, such as the rental of real or immovable property.” Platform operators now have until July 31^st, 2025, to file their reports without incurring penalties or interest. The first filing deadline for the 2024 calendar year was originally set for January 31^st, 2025.

The RH Partners Tax Team

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