5 Key Changes in Canadian Business Taxes for 2025

In Canada, businesses are subject to complex tax laws, making tax season a challenging time of year. From multiple tax obligations and detailed record-keeping to frequent filings and sophisticated tax planning, each of these add up to a significant administrative burden. As a result, Canadian businesses are among the most affected when changes are made to Canada’s tax policy. Every year presents new adjustments, both big and small, and 2025 is no different. Businesses must keep up with these changes to ensure compliance. In this article, we’ll cover five key tax changes affecting businesses in 2025, equipping business owners with the knowledge they need to file their 2024 taxes effectively.

Capital Gains Tax Changes in Canada for 2025

Before the parliament prorogation (the halt of all parliamentary activities) was in place, new legislation was proposed to change the capital gains inclusion rate. The CRA has announced they will follow the new capital gains inclusion rate despite not being formally enacted in parliament. This new capital gains inclusion rate is an increase at 66.67%. Additionally, the new inclusion rate applies to capital gains realized on or after June 25, 2024.  

This change effectively raises the tax implications of selling large assets. Businesses looking to sell assets in the future will need to rethink their investment decisions and profitability of their asset disposals. If you want to know how this change will affect your business and assets, reach out to one of our tax advisors for more details. Our professional advisors will help you reform your tax planning to reduce the impact of 2025’s new capital gains inclusion rate. 

Small Business Rebate Changes in 2025

Canada Carbon Rebate for Small Businesses Takes Effect

Canada’s 2024 Federal Budget came with changes and additions to the landscape of small business rebates. Canada’s carbon rebates, available for households across the province, will continue depositing funds into 2025. 

The 2024 Federal Budget announced a Canada Carbon Rebate for Small Businesses. This refundable tax credit does not require an application. Eligible Canadian businesses will receive the rebate automatically. The amount business owners receive will vary based on the federal fuel charge and the size of the business. Small businesses with 10 employees or less can expect to receive up to $5,000. On the other hand, larger businesses with more employees can receive up to $100,000. 

Eligible businesses should have already received part of the rebate in late November 2024. Deposits are set to continue throughout 2025. 

T4/T4A Dental Reporting Policy Extension

The requirement for employers and payers to report dental benefits on their tax slips has been waived. This comes after the new reporting requirements were introduced in 2023. The new rule requires employers to report whether employees or their family members had access to dental  insurance coverage by December 31 of the tax year. 

For the 2024 tax year, businesses who did not provide dental insurance to their employees are allowed to leave the dental benefits box blank. This means the CRA will not reject the tax slip for missing information if left blank. Keep in mind that the exclusion only applies to businesses that made a genuine attempt to comply with reporting rules. For example, if a business made an effort to, but was unable to get the necessary dental coverage information from their insurance provider. 

Curious about if this applies to your business? Contact us today! Our tax advisors will be able to determine what tax policies are applicable to you. 

Canada Revenue Agency Eliminates Paper Mail

By spring 2025, online mail will become the default communication method for the CRA. This means any notices and updates will be delivered to your business’s registered My Business Account (if applicable). Additionally, the CRA will send email notifications to alert business owners of mail in their My Business Account. 

For many businesses still relying on communication through mail, this is a major change affecting their ability to receive CRA mail at their convenience. Businesses will have to shift to a mainly electronic format for CRA communications moving forward, which is detrimental for business owners who aren’t tech-savvy. 

Exemption for Bare Trusts from T3 Reporting for 2025

For the 2024 tax year, bare trusts are not required to file the T3 Income Tax and Information Return and Schedule 15 Beneficial Ownership Information of Trust. This comes after the same exemptions were enabled for the 2023 tax year. Bare trusts are only required to be filed if directly requested by the CRA. 

Other types like discretionary trusts or trusts with complex arrangements are still required to be filed in the T3 return. If a business is involved in trusts that do not meet the bare trust criteria, they still need to report it and the trust’s beneficiaries. Businesses with bare trusts will experience a reduced administrative burden thanks to this year’s exemption. 

Let GRFS Simplify Your Business Taxes

Every year, administrative needs multiply for Canadian businesses during tax season. The need to organize and file complex business tax returns slows down regular business operations, potentially impacting profits. That’s why many Canadian businesses hire tax advisors and bookkeepers to manage their financial records, build effective tax strategies, and take on the administrative workload during tax season. 

Our team of financial advisors are equipped with a diverse range of financial skills and experience. We help our clients ensure tax compliance year by year with detailed record keeping, comprehensive tax reduction strategies, and personalized recommendations to make the most of your business income. 

We love taxes so you don’t have to! https://grfs.ca/tax-planning and streamline your yearly tax planning.