As GH&A closes out 2025, we are delighted to share our annual Christmas Letter and extend heartfelt holiday greetings to our valued clients and their families. We wish you a joyful holiday season and every success and happiness in the year ahead.
As has become our tradition, this year’s Christmas Letter offers a chance to share timely updates on personal and corporate tax matters, along with helpful tools and tips to support your business and accounting needs.
2025 Federal Budget – New Proposals
In a departure from the practice of prior years where the Department of Finance has typically released the Federal Budget in the springtime, the 2025 Federal Budget was announced by the current government on November 4, 2025. The following are some of the most notable tax proposals announced in this year’s Budget:
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Automatic Tax Filings for Low-Income Canadians – Budget 2025 proposes to ensure that more lower income individuals have access to various federal benefits, by providing the CRA with discretionary authority to file tax returns on behalf of individuals who have no federal taxes owing for the year and meet certain other criteria.
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Temporary Personal Support Workers Tax Credit – Budget 2025 proposes to introduce a temporary five-year Personal Support Workers Tax Credit to support personal support workers and recognize the vital role they play in communities. Eligible workers will be able to claim a refundable tax credit equal to 5% of their eligible income, providing support up to $1,100 per year. This new tax credit will be available in provinces and territories that are not covered by a bilateral agreement with the federal government to increase wages for personal support workers.
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Qualified Investments for Registered Plans –Small Businesses –Budget 2025 proposes to simplify and streamline the rules relating to registered plan investments in small businesses by introducing the following changes:
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RDSPs would be permitted to acquire shares of specified small business corporations, venture capital corporations, and specified cooperative corporations (as previously allowed for other registered plans);
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Shares of eligible corporations and interests in small business investment limited partnerships and small business investment trusts would no longer be qualified investments.
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Home Accessibility Tax Credit Changes – Budget 2025 proposes to amend the Income Tax Act such that an expense claimed under the Medical Expense Tax Credit cannot also be claimed under the Home Accessibility Tax Credit. This measure would apply to the 2026 and subsequent taxation years.
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Accelerated Investment Incentive and Other Capital Cost Allowance Measures for Businesses - Budget 2025 announces the government’s intention to move forward with several previously announced measures for businesses that provide an increased rate of write off the cost of their investments in certain types of depreciable property.
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Underused Housing Tax Eliminated - To simplify Canada’s tax system and reduce compliance costs for taxpayers and administrative costs for government, Budget 2025 announces the government’s intention to eliminate the Underused Housing Tax as of the 2025 calendar year.
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Luxury Tax on Aircraft and Vessels Eliminated – To provide relief to the aviation and boating industries and increase the overall efficiency of the luxury tax framework, Budget 2025 announces the government’s intention to end the luxury tax on aircraft and vessels as of the day after Budget Day.
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What was not included in the Budget – No changes proposed to personal or corporate tax rates.
2025 Federal Budget – Updates to Previously Introduced Measures
In addition to the various new income tax measures introduced, the 2025 Federal Budget and subsequently tabled Bill C-15 provided several updates on previously announced matters, and previously introduced legislation including the following measures:
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Increase to Capital Gains Inclusion Rate Cancelled – Budget 2025 officially cancels the previously proposed increase to the inclusion rate for capital gains. The inclusion rate will remain at 50%.
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Canadian Entrepreneurs Incentive (CEI) Cancelled – This incentive was introduced as part of the 2024 Federal Budget and proposed to provide access to a lower tax rate on the sale of certain qualifying small business shares or farming property. Budget 2025 did not announce any intention to continue with this proposal.
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Lifetime Capital Gains Exemption – Confirmation of the proposed increase in the Lifetime Capital Gains Exemption to apply to up to $1.25 million of eligible capital gains announced in Budget 2024.
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Canada Carbon Rabate for Small Businesses – Confirmation of tax-free treatment and extended filing deadlines for 2019-2023 calendar years.
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Reporting by Non-profit Organizations – Previously announced measures requiring additional tax reporting for non-profit organizations with under $50,000 of receipts for the year will be delayed until taxation years beginning January 1, 2027 or later (pending further review by the government).
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Delay of T3 Trust Return Filing Requirement for Bare Trusts - Budget 2025 confirmed that the government intends to proceed with previously proposed amendments to the rules regarding tax filing requirements for Bare Trusts, however, the requirement for Bare Trusts to file a T3 Trust return will be deferred to apply to taxation years ending on or after December 31, 2026.
For more details on specific measures introduced in the 2025 Federal Budget, visit our Budget Commentary page.
Caution! – Recent Switch to CRA Electronic Mail for Businesses and Some Individuals
For businesses - Starting spring 2025, the Canada Revenue Agency (CRA) transitioned to online mail as the default method of delivering most business correspondence. This means you’ll start receiving most of your business notices and other correspondence through CRA’s secure online portal in your Business account, instead of in the mail.
This will apply unless a specific request is made by the taxpayer to receive correspondence by mail.
For more information on this important change, visit the CRA Online Mail for Business webpage.
For individuals - If you are registered for a Canada Revenue Agency (CRA) account and currently receive paper mail, the way you receive your mail from the CRA might be changing.
Starting July 3, 2025, the CRA transitioned the delivery method for most mail from paper to online for approximately 500,000 benefit recipients. As of September 4, 2025, Phase 2 of this project will expand to include an additional 900,000 individuals, broadening the scope beyond just benefit recipients.
If you are part of this change, you will receive an email notification and, in some cases, a letter from the CRA with more information on what is changing.
If you prefer to continue receiving your mail by paper, step-by-step instructions on changing your correspondence preference in My Account can be found here.
For more information on this important change, visit the CRA Change from paper to online mail for some individuals webpage.
2026 Tax Amounts Announced by CRA
The CRA recently announced some updated tax rates and important amounts which have been indexed for inflation or otherwise revised for the upcoming tax year. Here are some important amounts that have been confirmed for 2026 with links to more information:
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Increase to marginal personal tax bracket thresholds – Federal tax brackets indexed by 2.0% from 2025 brackets.
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Increase to basic personal tax credit and other non-refundable tax credit amounts – Including Basic Personal Amount (BPA) increased from $16,129 to $16,452.
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CPP Maximum earnings and contribution amounts – CPP maximum pensionable earnings increased from $71,300 to $74,600 and CPP2 maximum pensionable earnings increased from $81,200 to $85,000. CPP maximum contributions increased from $4,034.10 to $4,230.45 and CPP2 maximum contributions increased from $396.00 to $416.00.
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Increase to maximum Employment Income contributions increased from $1,077.48 to $1,123.07.
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Increase to Old Age Security (OAS) repayment threshold from $93,454 to $95,323.
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Annual TFSA dollar limit for contributions will remain at $7,000.
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Increase in the Lifetime capital gains exemption for qualified farm or fishing property and qualified small business corporation shares from $1,250,000 to $1,275,000.
CRA Prescribed Interest Rates
The CRA has announced the prescribed interest rates for the first calendar quarter of 2026. The rates remain unchanged from the last quarter of 2025, including a rate of 7% charged on overdue taxes, Canada Pension Plan contributions, and employment insurance premiums.
Important Changes to the AgriInvest/AgriStability Programs
New filing deadlines – Starting with the 2025 program year, the deadline to file your AgriInvest program form without penalty will be June 30, 2026, and the deadline to file with penalty will be September 30, 2026. The filing deadline for AgriStability supplementary forms and tax information is also moving to June 30.
Agri-Environmental Risk Assessment – Starting with the 2025 program year, if your average Allowable Net Sales (ANS), before the ANS limit is applied, is $1 million or more for the previous three program years, you must have an eligible agri-environmental risk assessment in place to be eligible to receive matching government contributions. The risk assessment must be valid at some point during your 2025 fiscal year.
You can declare that you have an eligible and valid agri-environmental risk assessment in place for the program year in your My AAFC Account. If you’re not a My AAFC Account user, you will need to sign up.
More information on the AgriInvest changes can be found here.
Important Changes to the CRA’s Voluntary Disclosures Program
On October 1, 2025, the CRA announced important changes to its Voluntary Disclosures Program (VDP). The VDP program provides a means for taxpayers to come forward to CRA with overdue or missed tax filings, and the CRA would provide either full or partial relief from penalties and interest provided that certain conditions are met.
The changes to the program announced on October 1, 2025, aim to make the program less restrictive by allowing taxpayers and registrants who are prompted by communications about a potential non-compliance issue.
In addition, the VDP program now offers two new relief tiers: general and partial relief. If a VDP application is eligible for relief under the updated policy, the CRA will evaluate which type of relief it may grant depending on the type of application.
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General relief normally applies to unprompted applications. These applications will receive 75% relief of the applicable interest and 100% relief of the applicable penalties.
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Partial relief normally applies to prompted applications. These applications will receive 25% relief of the applicable interest and up to 100% relief of the applicable penalties.
For more information on the CRA’s Voluntary Disclosure Program, visit the CRA’s Voluntary Disclosures Program webpage.
First Time Home Buyers GST Rebate
On June 5, 2025, proposed legislation was tabled in the House of Commons to introduce a first-time home buyers’ (FTHB) GST/HST rebate, which would eliminate the GST (or federal portion of the HST) for first-time home buyers on a new home valued up to $1 million. The rebate would also allow first-time home buyers to reduce the amount of tax they pay on a new home valued between $1 million and $1.5 million.
If the proposed legislation receives Royal Assent, a first-time home buyer may be eligible for the FTHB GST/HST rebate in addition to the existing GST/HST new housing rebate. Where both rebates apply, the GST/HST FTHB rebate would act as a top up to the existing GST/HST new housing rebate.
For more information on this proposed initiative visit the CRA’s First-time home buyers’ (FTHB) GST/HST rebate webpage.
2025 Staff Announcements
Julie Reagan celebrated 25 years of employment with GH&A!
This year we welcomed Joshua Mitchell and Nathan Bratt to the GH&A Team.
Congratulations to Nathan Bratt on passing the CFE!
Social Media
Be sure to follow GH&A on social media for frequent updates and information on accounting and tax changes.
Disclaimer
The information in this publication is current as of December 18, 2025.
This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations, and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact Gregory, Harriman & Associates LLP to discuss these matters in the context of your particular circumstances. Gregory, Harriman & Associates LLP, its partners, employees, and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.