Need to Know: CRA Announces Penalty Relief for Taxpayers
Capital Gains Inclusion Rate Deferral and Filing Difficulties Have Led to Relief Measures
The Canada Revenue Agency (CRA) has announced several relief measures following the deferral of the capital gains inclusion rate increase to January 1, 2026. These changes have caused uncertainty for many taxpayers, but the CRA has responded by extending certain tax filing deadlines and waiving penalties in specific cases.
Key Dates & Relief Announcement
T1 income tax return
Normal due date: April 30, 2025, unless taxpayer (or spouse) carries on business in which case deadline is June 16, 2025.
Relief: No late-filing penalties and arrears interest for “impacted T1 Individual filers” if a return otherwise due April 30, 2025, is filed on or before June 2, 2025
T2 income tax returns
Normal due date: Six months after year-end
Relief: Relief for arrears interest and penalties for corporations that had a filing due date on or before March 3, 2025 was previously announced on November 14, 2024. Per CRA’s statement – there is no longer a basis for providing relief.
T3 income tax return (including taxation years that end between January 1, 2025 and January 31, 2025)
Normal due date: 90 days after the year-end (e.g. March 31, 2025 for a December 31, 2024 year-end)
Relief: No late-filing penalties and arrears interest for “impacted T3 Trust filers” if the return is filed on or before May 1, 2025
Ongoing Issues and Unanswered Questions
Despite these administrative relief measures, several uncertainties remain:
Definition of “Impacted T1 Individual Filers”: As noted by CPA Canada, The CRA has not clarified whether a spouse of an impacted filer, who has no capital gains, qualifies for the deadline extension.
Effect on Related Forms: It remains unclear whether extensions apply to prescribed forms such as the T1135 (Foreign Income Verification Statement). The penalty for failing to file a return is $25 per day for up to 100 days (minimum $100 and maximum $2,500).
Potential Tax Return Amendments: Many taxpayers may believe they have all their tax slips in April, file their returns, and later receive a T3 slip with a large capital gain in May. In such cases, they will need to amend their returns and pay any additional tax by June 1, 2025, to avoid interest charges.
No Extension of Payment Deadlines: These relief measures do not extend the actual tax due date. If a taxpayer files after June 1, 2025, interest could still be calculated from April 30, 2025.
Final Thoughts
For individuals who may be affected, while these extensions offer extra time, we remain committed to completing all tax returns by their original deadlines for a smooth and efficient filing process. We encourage clients to submit their tax documents as soon as they receive them!
While this situation has created unnecessary confusion, on top of the uncertainty surrounding the eventual implementation of the capital gains rate increase, we’re here to help you stay up to date on the ongoing changes and updates with the CRA. Taxes can be stressful—and that’s where Small-Books comes in:
What is Small-Books?
The online bookkeeping and tax filing service that gives you a dedicated bookkeeper supported by a team of knowledgeable small business experts. We’re here to take the guesswork out of taxes—for good. Your team keeps your finances up-to-date and can handle all of your tax filing needs; from HST, to payroll, to income tax - so you can say goodbye to tax season stress, forever!
This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. Small-Books assumes no liability for actions taken in reliance upon the information contained herein.
