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February 23, 2025
Tax Returns with Capital Gains Cannot be Filed for Now
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In 2024 federal budget, the government increased capital gains inclusion rate from 50% to 2/3, for properties disposed after June 24, 2024,
and only for the gains that are above $250,000 threshold.
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The change had huge impact on the Canadian tax regime, it not only affected how income is calculated, it also affected how some deductions,
carry-backs should be performed. Some tax benefits / credits are based on net income and some other are based on taxable income etc. Their
system has to make senses for all of them. The challenge was so big that the CRA would not be able to complete their system on time, their
initial estimation was that at end of February 2025 their system would be ready.
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Then on January 31, 2025, the government announced that the new inclusion rate would be delayed to 2026.
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This is not a relief for any one in the industry, the CRA or tax software developers. It added more work. In the middle of something, you have
to reverse some changes while keeping others. The challenge for the CRA become even bigger. Now their estimation is their system will not be
ready to process capital gains until the end of mid-March 2025.
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Before that time, tax returns with capital gains will not be accepted by the CRA. Paper returns are no exception.
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For tax software developers, all tax items must be certified by the CRA before you can file a return with that. At this time, CRA has not
started to certify capital gain calculations for any company.
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The CRA will grant relief in respect of late-filing penalties and interest until June 2, 2025, for Individual filers and until May 1, 2025,
for Trust filers, to provide additional time for taxpayers reporting capital gains to meet their tax filing obligations.
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If you want to file your taxes early but cannot because of this, please do not blame the CRA agents for this delay. They are good nice people
just like you and me, they have been working very, very hard to make the system run smoothly without errors. It is the proposed law itself has
made the system implementation so difficult.
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CRA has also not started to certified calculations for emigrants, deem-residents and non-residents. However, paper filing of those returns is not
prohibited at this time. We still encourage you to wait until April to file those returns. If the CRA system is not ready, paper return will not
be processed for sure. Once it is ready, electronic filing will always be processed faster. Keep in mind that for deemed-resident and non-resident
returns, only those without provincial presence can be filed electronically, otherwise they have to be filed by paper any way.
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Tax Chopper has completed all the above supported features with accurate calculations, including capitals gains, you can always count on our calculated results.
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Message from CRA:
The CRA will grant relief in respect of late-filing penalties and interest until June 2, 2025,
for Individual filers and until May 1, 2025, for Trust filers, to provide additional time for
taxpayers reporting capital gains to meet their tax filing obligations.
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