The 2025 personal income tax filing deadline is April 30, 2026. The filing deadline for self-employed individuals and their spouses (including HST returns) is June 15, 2026. All outstanding income tax and HST payments are due on or before April 30, 2026.
A checklist to assist you in gathering and summarizing your tax information can be accessed here.
The team at S+C Partners takes pride in filing returns on-time. In order to guarantee the timely filing of your return, we respectfully request that you forward your completed checklist, together with your 2025 personal tax information, to our office no later than April 6, 2026. Please note that the late filing of your income tax return will result in a CRA penalty of 5%* of any balance owing, plus an additional 1% for every month your return is late, up to a total of 12 months. The late payment of any balance owing (or late installment payment) will incur daily compounded interest charges at a prescribed rate that is updated every three months. As of February 2026, this rate is 7%.
We strongly encourage you to file and pay your taxes on time.
Note: If the CRA charged you a late-filing penalty for 2022, 2023 or 2024 and issued a formal demand for a return, your late-filing penalty for 2025 will be 10% of your balance owing. You will be charged an additional 2% for each month that you file after the due date, to a maximum of 20 months.
Please forward/upload your tax information only after you’ve compiled all slips and information. Most information slips will be issued by the end of February, however T3 and T5013 slips are not required to be issued until March 31st. For prescription and medical receipts, please provide a summary rather than the individual slips. You can access our new secure portal here: ClientPortal
We will prepare personal tax returns throughout March and April in the order in which complete tax information packages are received. If you are not expecting a T3 or T5013 slip, have all of your other required slips and information, and are eager to file your tax return as soon as possible, please advise us and we will get started right away.
Please remember that in order to e-file your return on your behalf, we will need you to sign and return Form T183 (Information Return for Electronic Filing of an Individual’s Income Tax and Benefit Return)—which you will receive from us with your completed tax return.
Our March and April office hours are Monday to Friday from 8:30 a.m. to 5:00 p.m. There will often be team members here earlier and later than these hours, as well as on weekends. Please call our office at (905) 821 9215 to schedule your visit. If you have any questions, please email us at tax@scpllp.com
Tax Updates for 2025 Tax Year
There are several updates to keep in mind as you gather information for your 2025 personal income tax return:
Reduction in Lowest Federal Tax Rate
In Federal Budget 2025, the Government introduced a “middle-class tax cut” that lowers the lowest federal personal income tax rate from 15% to 14%, effective July 1, 2025. As this change takes effect mid-year, the effective rate for the 2025 tax year is blended 14.5% on income within the first federal tax bracket ($0 to $57,375). Beginning in 2026, the full 14% rate will apply for the entire year. Since the value of most non-refundable tax credits is calculated based on the first (lowest) tax rate, the federal government has introduced a non-refundable top-up tax credit to prevent certain taxpayers from being disadvantaged by this tax rate reduction.
Launch of the Canada Disability Benefit (“CDB”)
Introduced in 2025, the CDB offers tax-free monthly payments of up to $200 ($2,400 annually, indexed to inflation) to support working Canadians aged 18-64 living with disabilities. Eligible applicants must be Canadian residents approved for the Disability Tax Credit, have filed their previous year’s tax return, and meet adjusted family net income thresholds. Payments started in July 2025, with retroactivity up to 24 months from application, but not before June 2025.
Discontinuance of Digital News Subscription Tax Credit
This non-refundable tax credit has been discontinued as of the 2025 tax year and is no longer claimable. It was available only for 2020-2024 tax years, offering up to $75 (15% of $500 maximum eligible subscriptions to Qualified Canadian Journalism Organizations).
Underused Housing Tax (“UHT”)
The UHT imposed a 1% annual federal tax on vacant or underused residential properties in Canada, effective from January 1, 2022, with filing and payment due by April 30 each year. The UHT no longer applies for 2025 and beyond, as it was eliminated in Federal Budget 2025. However, compliance, including filing and payment obligations for the 2022, 2023, and 2024 tax years, remains in effect.
Capital Gains inclusion rate update
In the 2024 Federal Budget, the Government proposed increasing the capital gains inclusion rate from one-half to two-thirds, while maintaining an exemption for the first $250,000 of capital gains realized by individuals. Although the change was initially scheduled to take effect on June 25, 2024, its implementation was later deferred to January 1, 2026. However, in Budget 2025, the Government announced that it would not proceed with the increase, leaving the inclusion rate at 50%, as the related legislation was never enacted.
Canadian Entrepreneurs’ Incentive (“CEI”) withdrawn
CPP2 is an additional contribution to CPP for earnings above a certain level. It took effect on January 1, 2024. Both employees and employers are required to contribute an additional 4% to the CPP on earnings between $68,500 (the annual maximum pensionable earnings) and $73,200 (the new additional maximum pensionable earnings). The maximum annual CPP2 contribution is $188 for employees and employers in the year 2024 ($376 for self-employed individuals).
Automobile Income Tax Deduction Limits
The automobile allowance rates paid per kilometre by employers to employees who use their personal vehicle for work have increased as follows:
| 2024 | 2025 | 2026 | |
| first 5,000 kilometres driven | $ 0.70 | $ 0.72 | $ 0.73 |
| kilometres driven there after | $ 0.64 | $ 0.66 | $ 0.67 |
The ceiling for the capital cost allowance (“CCA”) income tax deduction for the following new and used vehicles purchased in the year have increased as follows (before tax):
| 2024 | 2025 | 2026 | |
| Class 10.1 passenger vehicles | $ 37,000 | $ 38,000 | $ 39,000 |
| Class 54 zero-emission passenger vehicles | $ 61,000 | $ 61,000 | $ 61,000 |
The deductible leasing cost limit increased to $1,100 per month (before tax) in 2025 and will remain at the same level for 2026.
Personal Tax Rates
Here is an overview of the two highest combined marginal Federal & Ontario tax rates for 2025 and 2026:
| Capital Gains | Interest & Ordinary Income | Dividends | ||
| Eligible | Non-Eligible | |||
| 2025 | ||||
| ON ($220,000 – $253,414) | 24.92% | 49.85% | 34.25% | 43.50% |
| ON (> $246,752) | 26.76% | 53.53% | 39.34% | 47.74% |
|
|
||||
| Capital Gains | Interest & Ordinary Income | Dividends | ||
| Eligible | Non-Eligible | |||
| 2026 | ||||
| ON ($220,000 – $258,482) | 24.92% | 49.84% | 34.25% | 43.50% |
| ON (> $258,482) | 26.76% | 53.53% | 39.34% | 47.74% |
Future Year Updates
Personal support workers (PSWs) tax credit
In Budget 2025, the Government announced a temporary five-year refundable tax credit for eligible PSWs employed by qualifying health care establishments. The credit will apply for the 2026 to 2030 taxation years and will provide 5% of eligible earnings, up to a maximum of $1,100 per year. It will be available only in provinces and territories that do not have a bilateral agreement with the federal government to raise PSW wages (i.e., credit not available in British Columbia, Newfoundland and Labrador, and the Northwest Territories).
Previous Year Updates
Reporting the Sale of a Principal Residence
Individuals selling their principal residence must report the sale on their tax return and designate the years it was their principal residence to claim the Principal Residence Exemption (“PRE”). Failing to report can result in a maximum penalty of $8,000. Changing a principal residence to a rental property may trigger a deemed disposition unless an election is filed. Please discuss this with us, if applicable to you.
Foreign Reporting
Canadian residents holding specified foreign property with an aggregate cost over $100,000 at any time during the year must file form T1135 Foreign Income Verification with their personal income tax return. Specified foreign property includes investments outside Canada (e.g., bank and brokerage accounts, foreign companies and trusts, real estate, debt, foreign insurance policies, precious metals, crypto, etc.) or foreign investments held in Canada (e.g., foreign equities, crypto on a non-Canadian exchange). Though form T1135 is an information return, accurate completion is crucial, as failure to file can result in severe penalties from the CRA. Since this information isn’t always obvious during tax preparation, please provide details of specified foreign properties held in 2025 with an aggregate cost of at least $100,000. We recommend consulting your investment advisor, as they can often provide a summary of investment holdings by foreign country.
Residential Property Flipping Rule
Effective January 1, 2023, residential properties that are bought and sold within one year (with exceptions) do not qualify for capital gains treatment or the PRE. Exceptions include life events such as death, household additions, separation or divorce, safety threats, serious illness, work relocation, involuntary termination of employment, insolvency, natural disasters, or expropriation.
Multigenerational Home Renovation Tax Credit
Effective January 1, 2023, this credit offers a 15% tax refund on eligible renovation expenses for creating a self-contained secondary unit for a senior (65+) or an adult eligible for the disability tax credit. Eligible expenses are capped at $50,000 (maximum credit of $7,500) per completed renovation. The claim must be made in the tax year the renovation is completed.
First Home Savings Account (“FHSA”)
First-time homebuyers can contribute up to $40,000 lifetime and $8,000 per year to a FHSA. Contributions are tax-deductible, and withdrawals are tax-free for the purchase of a first home. Unused contribution room of prior years can be carried forward up to $8,000. For example, if no contributions are made in 2025 and 2026, the 2027 contribution room will be $16,000 ($8,000 for 2027 plus $8,000 from 2026). Contribution room is calculated from the year an account is first opened, even if no contributions are made.
Home Buyers’ Plan (“HBP”) Withdrawal
Effective April 16, 2024, the limit for withdrawal from Registered Retirement Savings Plans (“RRSPs”) under the HBP has increased from $35,000 to $60,000.
Increase in Lifetime Capital Gains Exemption (“LCGE”)
In 2024, the Government of Canada announced an increase to the LCGE from $1,016,836 to $1.25 million, effective June 25, 2024. This enhancement applies to the sale of qualified small business corporation shares and qualified farming and fishing property. The LCGE amount will be indexed to inflation for taxation years beginning in 2026, while the limit for 2025 remains at $1.25 million.
First Time Home Buyers’ Tax Credit
An eligible first-time home buyer can claim $10,000 for the purchase of a qualifying home. This non-refundable tax credit could result in a maximum tax savings of up to $1,500.
Home Accessibility Tax Credit (“HATC”)
The HATC is a non-refundable tax credit allowing individuals aged 65 or older or those eligible for the disability tax credit to claim up to $20,000 in home renovation expenses for improved accessibility, providing tax savings of up to $3,000.
New Alternative Minimum Tax (“AMT”)
The AMT calculations have been significantly modified to target high-income taxpayers. Effective January 1, 2024, the federal AMT rate has been raised from 15% to 20.5%, and the basic exemption has been increased from $40,000 to $177,882 (in 2025). The taxable income base used to calculate AMT has also been broadened. Amongst other changes, the inclusion rate of capital gains for AMT calculations has been increased from 80% to 100%, while the inclusion rate for capital gains on donation of publicly listed securities has been increased from 0% to 30%. Note: certain tax credits that could otherwise reduce the AMT payable have been limited, and the ability to deduct non-capital losses carried forward is reduced from 100% to 50%.
Second CPP Contribution Rate (“CPP2”)
CPP2 is an additional contribution to the Canada Pension Plan (“CPP”) for earnings above a certain level, effective January 1, 2024. Both employees and employers contribute 4% (8% for self-employed) on earnings between $71,300 (the 2025 annual maximum pensionable earnings, or YMPE) and $81,200 (the 2025 additional maximum pensionable earnings, or YAMPE). The maximum annual CPP2 contribution for 2025 is $396 each for employees and employers ($792 for self-employed).
S+C Partners is committed to helping you.
Our dedicated team of tax professionals is here to assist you. Please contact us at 905-821-9215 or tax@scpllp.com if you have any questions regarding any of the tax updates.
We specialize in tax, accounting, advisory and Information Technology. Explore our complete service offering.
Read our most recent Insights.
S+C Partners is a full-service firm of Chartered Professional Accountants, tax specialists, and business advisors with in-house expertise that extends well beyond traditional CPA services. In addition to audit, accounting, and Canadian tax services, we also offer business advisory services, comprehensive IT solutions, Human Resource consulting, and in-house expertise within highly focused areas such as US taxation, business valuations, and estate planning. We provide all the technical expertise of a large CPA firm, but with the personal touch and partner-level attention of a boutique accounting and advisory firm.