The CRA had been administering the Liberal government’s proposed hike in the capital gains inclusion rate before changing course.Justin Tang/The Canadian Press
The Canada Revenue Agency is telling taxpayers to wait to file their 2024 income tax and benefit returns if they’re reporting capital gains they realized last year.
In a release published Tuesday, the CRA says it continues to update its systems to reflect the 50 per cent capital gains inclusion rate. The agency says this process would be completed “in the coming weeks.”
The CRA had been administering the Liberal government’s proposed hike to the inclusion rate to 66.7 per cent, which was announced in the 2024 federal budget.
However, on Jan. 31, the agency said it would revert to the existing inclusion rate in line with Ottawa’s decision to defer the proposed capital gains changes to Jan. 1, 2026.
In response to questions from The Globe and Mail, CRA spokesperson Sylvie Branch says the CRA has now restored all its forms to the current rate.
However, changes to the agency’s systems and the corresponding certification of tax preparation software are still being finalized, Ms. Branch says.
Until this process is completed for a tax software platform, users might not be able to print or submit their returns, she says. Furthermore, until the CRA’s system changes are finalized, a notice of assessment for the return cannot be completed.
Ms. Branch says software platforms have started to be certified for returns reporting capital dispositions and most are expected to be certified before the end of March.
The CRA already announced on Jan. 31 it would give individual taxpayers reporting a capital disposition in 2024 until June 2 to file their 2024 tax returns without incurring interest or late-filing penalties. The deadline for filing an individual T1 return is April 30.
Taxpayers may need the extended time to file if they have to wait to receive tax slips.
The CRA is also giving financial firms extra time to issue tax slips because of the agency’s change in its capital gains administrative policy.
For example, mutual fund trusts and exchange-traded funds reporting a 2024 capital disposition have been given until May 1 to file 2024 T3 returns and T3 tax slips without incurring late-filing penalties. The deadline for filing slips is March 31.
Investment fund firms that had been preparing their T3 slips based on the proposed capital gains tax changes are now reviewing and correcting the slips, if needed, and may need more time to issue them to investors.
The CRA has also given issuers until March 17 to issue the T5008 (securities transactions) as well as certain other T5 tax slips (investment income) without penalty. The usual deadline is Feb. 28.
As a result of these filing extensions, The CRA says taxpayers’ slips might not be available in the CRA’s My Account, Represent a Client, or Auto-fill my return service if taxpayers look to file their returns.
In a response sent by e-mail to questions from the Globe, Ryan Minor, director of tax for CPA Canada in Sudbury, Ont., notes that taxpayers who are not reporting a capital disposition for 2024 still must file their returns by April 30. That includes taxpayers who realized gains or losses only from investments held in registered accounts.
“These individuals should be able to file their T1s now as they have no capital gains or losses [to report] and are thus not affected by the CRA [system] update,” Mr. Minor said.
In another statement sent via e-mail, Joseph Devaney, a chartered professional accountant and director of tax education and development at Video Tax News in Edmonton, says he’s concerned taxpayers will miss or forget to file tax slips this filing season, which will be particularly harmful to low-income taxpayers and those who want to file their returns early to receive refunds and benefits.
“There is a much higher chance that incomplete returns get filed, leading to higher [tax return] payouts and benefits than appropriate,” Mr. Devaney says. “Those taxpayers may have already spent the funds by the time they realize their returns are incomplete.”