CRA Announces Temporary Penalty Relief for Taxpayers Amid Capital Gains Inclusion Rate Delay
The Canada Revenue Agency (CRA) has introduced penalty and interest relief measures in response to the deferred implementation of the capital gains inclusion rate increase, which will likely not proceed. These changes have led to uncertainty among taxpayers and tax professionals, prompting multiple relief announcements from the CRA.
Key Penalty Relief Measures Announced by the CRA
On January 31, 2025, the CRA confirmed temporary relief for late-filing penalties and interest for trusts and individuals who report capital gains – “impacted filers”:
- T1 Individual Filers: who report capital gains. No penalties or interest if filed by June 2, 2025 (normally due April 30, 2025).
- T3 Trust Filers: who report capital gains. No penalties or interest if filed by May 1, 2025 (normally due 90 days after year-end).
The CRA stated in a February 13, 2025, update that this relief aims to provide extra time for taxpayers reporting capital gains to meet their filing obligations.
Additional Relief for Information Slips
On February 19, 2025, the CRA extended penalty relief for select information slips due to ongoing filing challenges:
- T4, T4A, and T5 slips: Penalty-free if filed by March 7, 2025 (normally due February 28, 2025).
- T4PS and T5008 slips: Penalty-free if filed by March 17, 2025.
- T3 slips for impacted T3 Trust filers: Penalty-free if filed by May 1, 2025.
However, any tax returns or slips filed after these relief deadlines will be subject to penalties based on the original due date. For instance, if a return due February 28, 2025, is filed on March 8, 2025, it will be considered eight days late, and penalties will apply accordingly.
Questions Remain About Relief Eligibility
CPA Canada has sought further clarification on certain aspects of the relief, including:
- Whether spouses of impacted T1 filers (who do not have capital gains to report) qualify for the extended deadline.
- Whether related forms, such as the T1135 Foreign Income Verification Statement, are also eligible for deadline extensions.
No More Corporate Penalty Relief
Originally, the CRA had announced penalty relief for corporations with filing deadlines on or before March 3, 2025, to accommodate the expected changes to capital gains reporting. However, with the inclusion rate change now postponed to 2026, the CRA has rescinded this relief, stating that corporations can continue using existing tax forms and software to file returns under the current one-half inclusion rate.
Updated Deadlines and Relief Periods for Impacted Taxpayers
Income Tax Returns
|
Return Type |
Normal Due Date |
Penalty-Free Filing Deadline |
|
T1 Individual |
April 30, 2025 (June 16, 2025, for self-employed taxpayers) |
June 2, 2025 |
|
T2 Corporation |
Six months after year-end |
No longer eligible for relief |
|
T3 Trust |
90 days after year-end |
May 1, 2025 (for impacted filers) |
Information Slips
|
Slip Type |
Normal Due Date |
Penalty-Free Filing Deadline |
|
T3 (for impacted trusts) |
90 days after year-end |
May 1, 2025 |
|
T4, T4A, T5 |
February 28, 2025 |
March 7, 2025 |
|
T4PS, T5008 |
February 28, 2025 |
March 17, 2025 |
What’s Next?
The CRA’s relief measures provide short-term flexibility for taxpayers and businesses affected by the evolving tax landscape. However, questions remain about eligibility and how these changes will impact other tax filings. CPA Canada continues to engage with the CRA to clarify outstanding issues and ensure taxpayers receive accurate guidance.
Stay updated as we monitor further announcements from the CRA regarding filing obligations and tax deadlines.