Welcome to 2025 tax season, fortunately so far there has been, more or less, stability in most tax rules, at least Federally, since the whole capital gains fiasco last year (now cancelled), the Underused Housing Tax (UHT) is now in the process of being repealed and the Bare Trust reporting having been deferred yet again.
However, we have definitely seen an uptick in enforcement and CRA reviews as they use more automated tools. For CRA reviews the most common areas for individuals has been data matching with investment slips, moving expenses, large donation or medical amounts, foreign tax credits and flow through tax planning.
Below is a chart from our friends at AuditShield providing a broader view of areas the CRA is focused on.
A note about accounting and bookkeeping fee changes, in BC, effective October 1, 2026
In the recent BC Budget, in a search for money, BC will be requiring accounting and bookkeeping firms to start charging 7% PST on its services provided to BC clients. The term accounting is not defined at this time but we expect it will encompass all of our services - including tax. The BC government will release more details closer to the implementation date. We oppose this change as it singles out a small sector of the service industry and the term accounting is also unclear at this point, in addition there is an irony to increase the cost for a service that is used to try to comply with the complexities that the government puts on their constituents.
What’s New in Personal Tax?
If you had a short term rental and did not comply with the municipal/province rules you will no longer be able to claim deductions. Hosts were required to comply with these applicable provincial and municipal registration, permit, license, and operating requirements by December 31, 2024. If you have not complied, ensure you comply now as deductions only qualify from the date of the business license.
Perhaps the most significant back door tax increase has been a change to the Alternative Minimum Tax rules starting in 2024 (and continuing) which became evident in last year filings. The minimum tax rate has increased from 15% to 20.5%, however the basic exemption from AMT has now moved up to the fourth income tax bracket (177,882 in 2025). The inclusion rate for taxable capital gains, allowable capital losses, and gains from listed personal property has risen to 100%, up from 80%. This also applies to trusts, while allowable business investment losses remain at a 50% inclusion rate. Donations of publicly listed securities to qualified donees now have a 30% inclusion rate for AMT purposes. At the same time deductions for AMT income are limited, with some increased by a factor of 7/5, and others, like stock options, no longer available. Loss carry-forwards are restricted: non-capital and limited partnership losses can only be used at 50% of their amounts, and capital loss carry-forwards are reduced to a 50% inclusion rate (which creates an asymmetry as capital gains are included at 100%). Additionally, only 50% of interest and financing expenses for borrowed amounts to earn income from property can be deducted for AMT purposes - this has been a real issue in prescribed rate loan planning. These changes aim to increase AMT liability for high-income individuals and limit excessive tax benefit reductions.
If you make money on a digital platform, make sure you are reporting as starting with the 2024 calendar year, reporting platform operators are now 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 that is collected and reported to the CRA under these rules to help you file your taxes.
If you have a family member who qualifies for the Disability Tax Credit there is a new Canada DIsability Benefit (CDB) that was launched which will provide up to $2,400 per year ($200 per month), indexed to inflation - tax exempt (age 18 to 64). See here for more details: https://www.canada.ca/en/services/benefits/disability/canada-disability-benefit.html
Other tax changes include: