As general behavior of legislative body at the beginning of the year, here are some important new fiscal measures to keep in mind when planning financial moves for 2025 and onwards.
Basic personal amount
The basic personal amount (BPA) is a non-refundable tax credit that can be claimed by all individuals, meaning how much a filer can earn without paying income tax; for 2025 this is $16,129. Unfortunately, this benefit is gradually reducing when income is higher than $177,882.
CPP Maximum pensionable earnings
The Pensionable Earnings under the Canada Pension Plan (CPP) for 2025 will be $71,300. The employee and employer contribution rates will remain unchanged from 2023 on 5.95%.
The CPP enhancement (known as the CPP2) implemented in 2024, has a second earnings ceiling at $81,200. The additional employee and employer contribution rates for 2024 will be 4.00%, on earnings between the maximum pensionable earnings and second ceiling.
Contribution to employment insurance (EI)
Effective January 1, 2025, the maximum insurable earnings increase to $65,700, and the employee EI premium rate is reducing to 1.64% the employee will pay a maximum annual EI premium of $1,077.48 and for the employer will be 1,508.47.
Increase on Capital gain tax
The changes will apply to any capital gains from June 24, 2024. Under the new rules, a larger portion of an individual’s capital gains (the profit made on the sale of assets) are considered taxable.
Previously, the government taxed 50 per cent of capital gains. While that amount stands for capital gains up to $250,000, it’s being increased to two-thirds for the part on the gains over $250,000.
Canada Carbon Rebate for Small Business Corporations
The Canada Carbon Rebate is part of the Climate Action Incentive Fund, designed to support businesses with fewer than 500 employees in provinces affected by the Federal carbon pricing system.
The rebate amount is based on the number of individuals employed by the business and the applicable rate for the qualifying year. The 2024 rebate is calculated retroactively to 2019 and includes adjustments for inflation and other factors. Moving forward, rebates will be calculated annually and will remain non-taxable.
Short-term rentals no expenses deduction
The Federal Government proposed to deny deductions for short-term rentals for taxpayers where there is non-compliance with provincial or municipal laws or regulations related to short-term rentals, starting on January 1, 2024.
