The Canadian tax-filing season officially opened on February 26, 2025, offering Canadians the opportunity to file their income tax and benefit returns online. With the number crunching underway, tax experts advise taxpayers to stay informed about changes and to file early, especially amid rising financial pressures across the country.
Clay Jarvis, a financial expert with NerdWallet Canada, noted the importance of claiming every available tax credit this season. He said, "Considering all of the financial stress Canadians are feeling right now, this might be a good year to take a closer look at your taxes to make sure you are claiming every single tax credit available to you." Jarvis emphasized the benefit of early filing, stating, "I think sooner is always best when itcomes to your taxes." Not only does this allow for quicker refunds, but it also gives taxpayers more time to seek assistance from the Canada Revenue Agency (CRA) if needed.
For this filing season, the federal income tax brackets have increased by 2.7% to adjust for inflation. Tax rates for 2025 are set at 15% for earnings up to $57,375; 20.5% for earnings between $57,375.01 and $114,750; and 26% for income from $114,750.01 to $177,882. Additional brackets include 29% for earnings between $177,882.01 and $253,414, with anything above taxed at 33%.
Most individuals are required to file their tax returns by April 30, 2025, to avoid penalties, whereas self-employed individuals have until June 16, 2025. Jarvis advised, "Getting on top of your taxes early can pay off, especially if your tax situation is somewhat complicated.” Procrastination can lead to late filing and potential penalties, which can add unnecessary pressure, especially when so many Canadians are trying to manage their financial situations.
Recent updates from the CRA include the debut of automatic tax filing services for low-income Canadians with straightforward tax situations. This service, named SimpleFile by Phone, aims to reduce barriers to tax compliance for eligible individuals. CRA spokesperson Déborah Cléry noted, “Automated filing will let over two million Canadians file taxes without added stress.” The agency has also simplified its website, making it easier to navigate My Account, My Business Account, and other services.
Significant news for this tax season includes the delay on changes to the capital gains inclusion rate, which the federal government announced would not take effect until January 1, 2026. Originally set for June 25, 2024, changes would have taxed two-thirds of capital gains over $250,000, but the current rate of 50% remains unchanged for 2025. According to the CRA, “If you are impacted by this situation, you may avoid processing delays by waiting until the updates are completed to file your return.”
The 2025 tax season also sees some adjustments to taxpayers' benefits. For example, taxpayers should be aware of the extension granted for charitable donation receipts due to disruptions caused by the Canada Post strike. This means donations made in January and February 2025 can be applied retroactively to either the 2024 or 2025 tax return.
Brian Quinlan, a financial expert, stressed the importance of gathering all receipts and pertinent documents before beginning filing. “Most of those come electronically now from your bank, or they may come via mail,” he explained. “But the good thing is, even if you perhaps moved or didn't get a slip, odds are pretty good it's on CRA's website.” He advised taxpayers to gather information beyond what the CRA provides to maximize their refunds.
Jarvis emphasized, “Don’t treat [tax refunds] as a windfall. Don’t go out and blow it.” He suggested using refunds wisely—for savings or paying off debts—to achieve long-term financial benefits.
Canadians should also familiarize themselves with the many potential tax credits available; Jarvis pointed out there are over 400 tax credits and deductions. Engaging with resources to understand all eligible credits can be beneficial for taxpayers. H&R Block tax specialist Yannick Lemay reiterated this sentiment, warning against missing out on valuable credits and the negative repercussions of failing to file taxes on time, even when no taxes are owed.
Taxpayers could miss out on credits tied to various federal and provincial benefits, such as the Canada child benefit and GST/HST credit, if they neglect to file. Lemay stated, “They could be missing out on some credits and benefits being paid by the federal or provincial governments, but also sometimes there could be penalties even if you don't owe taxes to CRA.”
Overall, the 2025 tax season offers various updates and opportunities for Canadian taxpayers. It emphasizes preparation, early filing, and awareness of new services and tax parameters. By taking full advantage of available resources and seeking knowledge about tax regulations, Canadians can navigate this tax season with greater ease and potential financial reward.