Staying updated on tax laws can feel overwhelming for Toronto businesses. Starting in 2025, the CRA will switch to online mail for most business communication. This page explains key tax changes and how they affect your company.
Key Takeaways
- Starting in 2025, businesses must use CRA’s online mail system for tax communication. Paper letters will need Form RC681 from May 2025.
- The capital gains inclusion rate rises to 66.67% on January 1, 2026. Individuals can still claim the lower 50% rate for up to $250,000 in yearly capital gains.
- Small companies can get the Canada Carbon Rebate (CCR-B). It helps businesses with fewer than 300 employees reduce carbon costs.
- Clean Technology Investment Tax Credit gives a 30% refund for green tech but requires meeting labor rules.
- Accelerated Capital Cost Allowance lets small firms deduct up to three times more on tools used before 2028.
Overview of Recent Corporate Tax Changes in Canada
Canada has made several updates to its corporate tax rules. These changes impact business planning, reporting, and credits.
Enacted Changes
Canada made updates to help businesses go green. Clean Technology Investment Tax Credits now cover renewable energy systems and battery storage. Businesses can claim these credits for equipment costs.
Proposed Changes
The capital gains inclusion rate might go up from 50% to 66.67%. This change was delayed and will now begin on January 1, 2026. New trust reporting rules could start in 2025 with stricter requirements.
Employers might get more time through 2024 for T4/T4A filing rules about dental benefits. These updates aim to make compliance easier while adjusting how taxable benefits are reported.
Key Changes Affecting Toronto Businesses in 2025
Toronto businesses face significant tax updates in 2025. These changes may impact operations and financial planning—knowing them is crucial.
Increase in Enhanced Investment Tax Credit Limits
The investment tax credit limit went up from $3 million to $4.5 million in 2025. Businesses can now get bigger credits for qualifying costs.
The phase-out threshold raised, going from $10 million to $15 million. The full phase-out will happen at $75 million instead of the old $50 million. These changes aim to help businesses invest more and grow the economy.
New Refundable Corporation Income Tax Credit
Canada offers a new refundable income tax credit for businesses. This is called the Canada Carbon Rebate for Small Businesses (CCR-B). It helps cut carbon emissions and gives financial support.
Payments depend on employee numbers. Businesses with fewer than 300 employees get full payments. Companies with 300-500 workers receive smaller payments. Businesses with over 500 employees do not qualify.
This tax credit provides corporate tax relief and supports small businesses. Eligible companies can use this rebate to cover costs for reducing carbon emissions. It helps small and medium-sized businesses save money while meeting government environmental goals.
Adjustments to Capital Gains Inclusion Rates
The capital gains inclusion rate went up to 66.67% on January 1, 2026. This change was delayed from the original date of June 25, 2024.
People can still use the lower 50% rate for up to $250,000 in yearly capital gains. Businesses must follow the new higher rate right away with no exceptions.
Clean Technology Investment Tax Credits
The Clean Technology ITC gives a 30% refundable tax credit. It covers eligible items bought after March 27, 2023. To get the full benefit, businesses must follow labor rules.
The tax credit rate may drop if labor rules are not followed. This program lasts until 2034 and supports green tech like renewable energy and low-carbon solutions.
Canadian Journalism Labor Tax Credit
This tax credit helps media companies in Canada. It covers 35% of eligible labor costs from January 1, 2023, to December 31, 2026. Before this time, the rate was only 25%.
Companies can claim up to $85,000 per employee each year for qualifying expenses. This is higher than the old limit of $55,000. Corporations, partnerships, and trusts can apply for this refundable credit.
Proposed Capital Gains Inclusion Rate Legislation
The capital gains inclusion rate went up to 66.67% on January 1, 2026. This change impacts corporations and trusts. Individuals can still use the current 50% rate but only for the first $250,000 of yearly capital gains.
The Lifetime Capital Gains Exemption (LCGE) will increase to $1.25 million. These changes aim to adjust taxes on investment income and support wealth redistribution through tax reform policies.
Trust Reporting Modifications
New trust reporting changes were announced on August 12, 2024. People could give feedback until September 11, 2024. Bare trusts will not need to file T3 returns for the 2024 tax year.
New rules for express trusts begin in 2025. They include stricter filing rules and compliance steps. Trust reporting deadlines will also change under these updates.
Changes to Electronic Filing of Information Returns
Starting January 2025, T3, T4, T4A, and T5 forms must be filed online. A T619 Electronic Transmittal Record will now be needed for filing. Each file can only include one type of form.
New online checks will help catch mistakes in filings. This change makes error-checking easier and ensures correct electronic filing of information forms.
Transitioning to Online Mail for Business Correspondence
Starting in spring 2025, online communication will be the main way for tax updates. Businesses must use My Business Account to get emails and notices. Paper mail will only be an option if you file Form RC681 starting May 2025.
Update your email in My Business Account soon to avoid missing important updates. This change allows faster replies and lowers paper waste. Online filing helps manage taxes better and keeps businesses informed about key actions.
Clean Hydrogen Investment Tax Credit (ITC)
The Clean Hydrogen Investment Tax Credit (ITC) gives a 15%-40% refundable tax credit. The rate depends on how much carbon the clean hydrogen property emits. This applies to projects from March 28, 2023, through 2035.
To get the highest rate, businesses must follow labor rules. If they don’t comply, the ITC drops by 10 percentage points. This incentive encourages green technology and helps cut greenhouse gas emissions.
Electric Vehicle Supply Chain ITC
A 10% tax credit helps cover building costs in the electric vehicle supply chain. This refundable credit backs clean transportation and renewable energy.
Accelerated Capital Cost Allowance
Accelerated Capital Cost Allowance helps small businesses save on taxes. It offers up to three times the normal first-year deduction, following the half-year rule. Full expensing applies to machinery and equipment in Class 53, like manufacturing tools.
Eligible property bought after November 20, 2018, and used before 2028 qualifies. This tax break encourages investment in new assets for faster growth and savings.
Global Minimum Tax Implications
Big international companies must pay at least a 15% tax rate. This rule is for companies making over $750 million worldwide each year. It starts for fiscal years beginning on or after December 31, 2023.
Not following this rule can lead to big fines. Small businesses might not be directly affected but could see changes because of global tax rules.
Ontario Corporate Tax Rate Changes
Ontario’s corporate tax rates do not change. The rate for small businesses stays at 3.20%.
The CA$500,000 small-business limit also stays the same. This keeps costs steady for Toronto companies and small businesses.
British Columbia Specific Tax Adjustments
Products that support gambling will not qualify for the interactive digital media tax credit after September 1, 2024. The sales tax in British Columbia stays at 7%.
Owners who do not live on their property must pay a high 20% tax under the Underused Housing Tax (UHT). A vacant home tax was also added to increase housing supply.
Understanding New Compliance Requirements
New rules need online businesses to register and pay GST/HST. Selling digital products to Canadian buyers means foreign businesses must follow these rules too.
GST is 5%, while HST ranges from 13% to 15%, based on the province. Fines for breaking tax laws are higher now, so staying informed is important.
Planning for Tax Credit Opportunities
Discover tax credit opportunities with the new Canada Carbon Rebate for Small Businesses (CCR-B). It provides a refundable tax credit to cut costs. Use immediate expensing for productivity-boosting assets purchased after April 16, 2024.
Benefit from increased investment tax credits for clean technology and hydrogen projects. Claim the Accelerated Capital Cost Allowance on eligible property to manage expenses more effectively.
These strategies can help you save money and grow your business investments.
Conclusion
Corporate tax changes are coming fast. Toronto businesses must stay ready. These updates affect taxes, credits, and compliance rules. Hadri Law can guide you through them all. Plan ahead now to avoid issues later! Contact us today at 437-974-2374 Email: contact@hadrilaw.com or book a consultation.