The Canada Revenue Agency (CRA) announced relief measures for companies and trusts facing late filing penalties due to the lack of updated tax forms reflecting proposed capital gains inclusion rate changes. The CRA intends to administer the new rate retroactively to June 25, 2024, despite legislative approval not being finalized.
The CRA said it would provide arrears interest and penalty relief to corporations and trusts that had to file a return by March 3, 2025 without access to updated CRA forms reflecting the new capital gains inclusion rate.Incorporated clients and small businesses facing imminent tax-filing deadlines remain in the dark on how to file their tax returns or calculate their taxes owed as the federal government’s proposed hike to the capital gains inclusion rate remains in legislative limbo.
Corporations and most trusts are subject to the higher inclusion rate on all capital gains realized June 25 and after under the proposed legislation, not just on gains above an annual $250,000 exemption amount available to individuals and some trusts. “I suspect they won’t, simply because they don’t have the authority to tell taxpayers to do that without the legislation,” he says.
For example, the CRA did not provide a direct response to a question from the Globe and Mail as to whether the interest relief it was offering was for the difference between taxes paid when calculated at a 50 per cent capital gains inclusion rate and a 66.7 per cent rate, or whether the relief extended to the non-payment of taxes up until March 3, 2025. The CRA also did not provide information as to which penalties it would relieve.
CANADA REVENUE AGENCY TAX FORMS CAPITAL GAINS INCLUSION RATE CORPORATIONS TRUSTS
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