2025 Tax Confusion Clarity (One Good, One Bad)

On January 8, 2025, the Canada Revenue Agency made two announcements about 2024 income tax return filings.

The CRA announced that so-called “bare trusts” would not have to file a T3 Income Tax and Information Return for the 2024 taxation year unless a return is requested.  This extends the 2023 policy that was announced on the eve of the 2023 filing deadline.  While most so-called bare trusts are actually agency arrangements and not trusts at all, draft legislation will deem many such agency arrangements to be trusts for reporting purposes.  But even such to-be-deemed trusts will not have to file as trusts for 2024.

The CRA also announced that it would administer income tax returns as if the proposed capital gains tax rate increase had been passed into law.  This will be the case unless the government announces that it will not be proceeding with (or will delay) the proposed rate increase.  The prudent approach will be to file on this basis and then to file a notice of objection to the assessment that is issued by the CRA.  The basis for the notice of objection will be that the rate change is not yet in force.  The objection will have to be held in abeyance until it becomes clear whether the increase will or will not be enacted into law as proposed.  That will take a while to determine.

For the formal announcement, see. https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2025/top-changes-affecting-business-taxes-2025.html.



Recent News