Canada Tax changes affecting Start-Up visa applicants in 2025

Highlights: Tax Changes in Canada affecting Start-up visa applicants in 2025

• Canada is planning to introduce several tax changes that will impact Start-Up visa applicants in 2025.
• The Canada Revenue Agency (CRA) will digitalize all new updates for most business correspondence.
• Existing and new business registrations in Canada will be affected by the new changes.
• The new changes are to be effective from spring 2025.

 

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Major tax changes in Canada 2025

 

According to recent news, Canada will introduce a number of major tax changes in 2025, which is likely to impact entrepreneurs willing to apply for the Canada Start-Up Visa program this year. The following are the key tax changes to be introduced in 2025 in Canada:

 

Transition to Online Mail: The Canada Revenue Agency (CRA) is planning to make online mail as the default process for business correspondence. CRA will announce the major notices and updates via the My Business Account Portal. This will be applicable for existing and new business registrations as well as businesses represented via the “Represent a Client” service. Candidates must make sure to keep their email address up-to-date in “My Business Account” to receive updates on time.

 

New Inclusion Rate for capital gains: The CRA is awaiting parliamentary approval to introduce new inclusion rate for capital gains. The new changes will increase the inclusion rate for capital gains, affecting selling prices for shares. The CRA will also provide updated forms for corporations, trusts and individuals from January 31, 2025. The new change will also include penalties for applications filed after March 03, 2025 and relief for arrears interest.

 

Changes in Trust Reporting Requirements: The exemption policy restricting bare trusts from filing T3 Income Tax and Information Return for the 2024 tax has been extended by the CRA. Other trusts are required to update reporting requirements including filing T3 return with Schedule 15 and complying with specific CRA requests for trust information.

 

Canada Pension Plan Enhancements: The Year’s Maximum Pensionable Earnings (YMPE) will increase to CAD 71,300 in 2025 while the Year’s Additional Maximum Pensionable Earnings (YAMPE) is set to be at CAD 81,200. Candidates earning between CAD 71, 300 and CAD 81,200 are subjected to CPP2. The payroll system should be updated by both employers and employees so that the new changes would show. Entrepreneurs must comply with these rules while recruiting members to avoid penalties.

 

Enhanced Digital Services: The digital platforms are being upgraded to improve user experience for businesses. The new changes include improved navigation and layout of the ‘My Business Account’ and ‘Represent a Client’ Portal, new notification for account changes and payments. The updates also include tools like the Scientific Research & Experimental Development (SR&ED) Self-Assessment Tool to ease the process of claiming tax credits.

 

Updates to Filing Information Returns: Starting from January 2025, candidates submitting tax returns must follow the updated guidelines, which include limiting submissions to a single type of return and notifying businesses in case of discrepancies before filing.

 

Administrative Relief for T4/T4A Reporting: Candidates who do not have a dental coverage plan under the Canadian Dental Care Plan (CDCP) can now keep the box for T4 and T4A slips unchecked for 2024 tax year. However, entrepreneurs must make sure to update their payroll systems for these changes to show.

 

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