The 2025 tax-filing season brings several notable updates to the T1 Personal Income Tax Return in Canada. These changes aim to simplify the filing process, provide relief to taxpayers, and adjust to economic conditions. Here’s an overview of the key updates you need to know:
1. Increase in the Basic Personal Amount (BPA)
The federal Basic Personal Amount, which is the income threshold below which no federal income tax is payable, has been increased to $16,129 for the 2025 tax year. This means that individuals earning up to this amount will not owe federal income tax, and those with higher incomes will benefit from a partial exemption. This adjustment helps to offset the impact of inflation on taxpayers’ purchasing power.
2. Adjustments to Federal Tax Brackets
To account for inflation, the federal tax brackets have been adjusted for the 2025 tax year. The new brackets are as follows:
- 15% on income up to $57,375
- 20.5% on income over $57,375 up to $114,750
- 26% on income over $114,750 up to $177,882
- 29% on income over $177,882 up to $253,414
- 33% on income over $253,414
These adjustments ensure that taxpayers’ tax liabilities reflect current economic conditions.
3. Changes to Capital Gains Taxation
While the federal government had proposed increasing the capital gains inclusion rate from 50% to 66.67%, this change has been deferred to January 1, 2026. For the 2025 tax year, the capital gains inclusion rate remains at 50%. However, the Lifetime Capital Gains Exemption (LCGE) has been increased to $1.25 million for dispositions of qualified small business corporation shares, qualified farm property, and qualified fishing property.
4. Enhanced Home Buyers’ Plan (HBP)
The HBP withdrawal limit has been increased from $35,000 to $60,000 for withdrawals made after April 16, 2024. Additionally, a temporary repayment relief measure allows participants who made a first withdrawal between January 1, 2022, and December 31, 2025, to defer the start of the 15-year repayment period by an additional three years.
5. Reporting Requirements for Digital Platform Sellers
Starting with the 2024 calendar year, digital platform operators are required to 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. If you are a reportable seller, your reporting platform operator will provide you with an annual copy of the information collected and reported to the Canada Revenue Agency (CRA) by January 31, 2025, to assist you in filing your taxes.
6. Adjustments to Charitable Donation Deadlines
The deadline for making charitable donations that qualify for the charitable donations tax credit for the 2024 taxation year has been extended from December 31, 2024, to February 28, 2025. This extension applies to eligible cash gifts, including those made by cheque, credit card, money order, or electronic payments, but does not include gifts in kind or other specific types of donations.
7. Updates to Tax Filing Deadlines
The tax-filing deadline for individual taxpayers is April 30, 2025. However, if you or your spouse/common-law partner are self-employed, the deadline is extended to June 16, 2025. It’s important to note that while the filing deadline may be extended, any taxes owed are still due by April 30, 2025. Failure to pay by this date may result in interest and penalties.
8. Relief from Late-Filing Penalties
The CRA has announced relief from late-filing penalties and interest for certain taxpayers. This relief applies to individual filers until June 2, 2025, and to trust filers until May 1, 2025, to provide additional time for taxpayers reporting capital gains to meet their tax filing obligations. This measure aims to assist taxpayers affected by the deferral of the capital gains inclusion rate change.
9. Changes to Information Return Filing
If you file information returns, such as the T3 (trust income), T4 (remuneration paid), T4A (pension and other income), or T5 (investment income), there are some important updates you need to be aware of. The CRA will grant relief in respect of late-filing penalties for information returns filed on or before March 7, 2025, for those information returns normally due on February 28, 2025. This extension provides additional time for filers to submit their information returns without incurring penalties.
10. Changes to Authorization for Tax Representatives
Effective July 15, 2025, the CRA will no longer allow tax representatives to obtain access to an individual’s account through the EFILE system. Instead, representatives will need to use the “Represent a Client” portal to request online access to an account. This change aims to enhance security and streamline the process for authorizing tax representatives.
These updates to the 2025 T1 Personal Income Tax Return reflect the government’s efforts to adapt to economic conditions, provide relief to taxpayers, and ensure the integrity of the tax system. It’s important to stay informed about these changes to ensure accurate and timely filing of your tax return.
