Canada Tax changes affecting Start-Up visa applicants in 2025

Highlights: Canada implements Tax changes for Start-Up visa applicants in 2025

• Canada has a plan to introduce new changes to the Canadian Tax system in 2025
• Canada’s Tax system changes will affect start-up entrepreneurs immigrating through the Start-Up Visa (SUV) program in 2025.
• Canada will make online mailing a default for most business agreements starting in spring 2025.
• In 2025, the Year’s Maximum Pensionable Earnings (YMPE) will be $71,300.00, and the Year’s Additional Maximum Pensionable Earnings (YAMPE) will be $81,200.
   

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Changes in Canada’s Tax System in 2025

Below are the changes in Canada’ Tax system in 2025:
 

Changes to Online Mail for Business Correspondence

From the beginning of spring 2025, the Canada Revenue Agency ((CRA) will make online mail a default for most business correspondence. The key update will be sent via the My Business Account portal instead of paper mail. This change will affect:
 

• New Business number and program account registrations.
• Existing businesses registered in the My Business Account portal
• Businesses represented through the Represent a client service
   

Note: Ensure that the mail is up to date in My Business Account to receive timely notification about new mail
 

Changes in Capital Gain Tax

The CRA has introduced new inclusive rates for capital gains pending parliamentary approval. The changes are:
 

• The higher inclusion rate for capital gains realized on or after June 25, 2024, primarily impacts the start-up founders selling shares.
• All the updated application forms for individuals, corporations, and trusts will be available by January 31, 2025
• Relief for arrears interest and penalties applies to filing due on or before March 3, 2025
   

Requirements for Trust Reporting

The CRA has extended the bare trust filing of T3 Income Tax and Information Return for the 2024 tax year. Other trusts will adjust with the updated requirements, which include:
 

• Filing the T3 return with Schedule 15
• Having compliance with specific CRA requests for trust information
   

Note: Proper documentation and trust management is essential to meet these requirements and to avoid penalty
 

Enhancements for the Canada Pension Plan

Canada has increased the Year’s Maximum Pensionable Earnings (YMPE) to $71,300, whereas the Year’s Additional Maximum Pensionable Earnings stand at $81,200. These changes complete the enhanced Canada Pension Plan (CPP) legislative updates. Key changes are:
 

• Contributions on earning between $71,300 and $81,200
• Everyone, including employers and employees, should have updated payroll systems to reflect the new threshold
• Hiring staff must ensure that they adhere to the policy to avoid fines
   

Short-Term Rental Compliance

The new rule also applies to short-term rental operators to comply with municipal and provincial regulations to claim tax deductions. This applies to:
 

• Licensing and Registration
• Permits and operating requirements
   

Note: Operators must meet local compliance standards by December 31, 2024, to remain eligible for deduction. 
 

Changes in Digital Services

The digital platform has also been improved for business usability. The key changes are:
 

• To represent a client portal in My Business Account and Representation new enhanced navigation and layout
• New email notification options for tasks such as payments and account changes
• Tools for Scientific Research and Experimental Development (SR&ED) Self-Assessment Tool to simplify the Tool credit claims
   

Transition to Filing Information Returns

The Electronic submissions of Tax returns will follow updated guidelines from January 2025:
 

• Submission will be limited to a single return type
• Before filing new validation, they will be notified for business of discrepancies
   

Administrative Relief for T4/T4A report

Employers who do not offer dental coverage under the Canadian Dental Plan (CDCP) for the 2024 Tax year can skip the relevant box blank for T4 and T4A slips. However, non-compliant Entrepreneurs employing staff should ensure their payroll system is updated.
 

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