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Category: Personal

2025 Combined Federal and Ontario Personal and Corporate Income Tax Rates (includes 2024 rates)

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2025 Combined Federal and Ontario Personal Income Tax Rates(I)

Taxable
Income		Salary/
Interest (%)		Eligible
Dividends (%)		Ineligible
Dividends(II) (%)		Capital
Gains (%) (First $250,000)		Capital
Gains (%) (> $250,000)
First $52,88620.05(6.86)9.2410.03
$52,887–$57,37524.15(1.20)13.9512.08
$57,376–$93,13229.656.3920.2814.83
$93,133–$105,77531.488.9222.3815.74
$105,776–$109,72733.8912.2425.1616.95
$109,728–$114,75037.9117.7929.7818.95
$114,751–$150,00043.4125.3836.1021.70
$150,001–$177,88244.9727.5337.9022.4829.98
$177,883–$220,00048.2932.1141.7224.1432.19
$220,001–$253,41449.8534.2643.5124.9233.23
Over $253,41453.5339.3447.7426.7635.69

(I) These rates do not include the Ontario Health Premium. (II) These rates apply to the actual amount of taxable dividends received from taxable Canadian corporations. Eligible dividends are those paid by public corporations and private companies out of earnings that have been taxed at the general corporate tax rate. E. & O.E.

2025 Combined Federal and Ontario Corporate Income Tax Rates

2025
General Rate26.50%
Small Business (to $500,000)12.20%
Investment50.17%

Based on corporations with fiscal years commencing January 1, 2025, and ending December 31, 2025.

E. & O.E.

2024 Combined Federal and Ontario Personal Income Tax Rates(I)

Taxable
Income		Salary/
Interest (%)		Eligible
Dividends (%)		Ineligible
Dividends(II) (%)		Capital
Gains (%) (First $250,000)		Capital
Gains (%) (> $250,000)
First $51,44620.05(6.86)9.2410.03
$51,447–$55,86724.15(1.20)13.9512.08
$55,868–$90,59929.656.3920.2814.83
$90,600–$102,89431.488.9222.3815.74
$102,895–$106,73233.8912.2425.1616.95
$106,733–$111,73337.9117.7929.7818.95
$111,734–$150,00043.4125.3836.1021.70
$150,001–$173,20544.9727.5337.9022.4829.98
$173,206–$220,00048.2932.1141.7224.1432.19
$220,001–$246,75249.8534.2643.5124.9233.23
Over $246,75253.5339.3447.7426.7635.69

(I) These rates do not include the Ontario Health Premium. (II) These rates apply to the actual amount of taxable dividends received from taxable Canadian corporations. Eligible dividends are those paid by public corporations and private companies out of earnings that have been taxed at the general corporate tax rate. E. & O.E.

2024 Combined Federal and Ontario Corporate Income Tax Rates:

2024
General Rate26.50%
Small Business (to $500,000)12.20%
Investment50.17%

Based on corporations with fiscal years commencing January 1, 2024, and ending December 31, 2024.

E. & O.E.

Ontario Rebate

Posted on by david

In October 2024, the Ontario government announced a $200 rebate for people residing in Ontario. The intention of the rebate is to compensate families paying high interest rates and the federal carbon tax.

Individuals who pay tax in Ontario will each receive $200 as well as another $200 for each child in an eligible family. So, a family of five, including two adults and three children, will receive $1,000.

To be eligible people over 18 years of age as of December 31st, 2023 must have filed their 2023 Income Tax and Benefit Return by the end of 2024.  Families who qualify for Canada Child Benefit (CCB) payments for 2024 will also receive the additional $200 for each eligible child under 18 years old.

For circumstances where there exists a shared custody arrangement for a child, payments will be split based on the most recent CCB information available.

For families with children who did not receive the CCB for 2024, the government will provide an opportunity for a taxpayer rebate payment of $200 per child through an alternative process.

This rebate will be mailed out in early 2025.

2024-2025 Canada Carbon Rebate amounts

Posted on by david

In 2019, the federal government levied carbon taxes on fuel in provinces that did not create a carbon tax plan of their own.  Since this tax will mostly fall on consumers, families will receive a refund to offset the cost.

Prior to 2021, the CCR was a refundable tax credit claimed annually on personal income tax returns.

However, from 2022 forward, the CCR payment is paid as a quarterly benefit.

If you are entitled, you will automatically receive your 2024-2025 CCR four times a year, starting in July, 2025.

Family MemberOntarioManitobaSaskatchewanAlberta
First adult$560$600$752$900
Second adult$280$300$376$450
First child$140$150$188$225
Second child$140$150$188$225
Family of 4$1,120$1,200$1,504$1,800

There will be a 20% supplement (previously 10%) for residents of small and rural communities (where public transit options are limited or unavailable)

We have noticed some confusion with the Supplement for Residents of Rural and Small Communities.  On the Schedule 14, it lists various Ontario census metropolitan areas.   If you do not see your town or city listed, it does not mean you are eligible for the Supplement.  For example, Newmarket and Aurora fall under the Toronto CMA.    

For a full listing of CMAs, click here

Basic Personal Amount Tax Credit

Posted on by david

What is a basic personal amount?

The basic personal amount is the amount of income you can earn without having to pay any income tax.

What is the basic personal amount for this year?

The amount for 2024 was $14,156 and will be increasing by indexation to $14,538 in 2025.

Updates & Announcements

On December 9, 2019, the federal government announced that an “additional amount” would be added for 2020 and later.

For 2024, this additional amount is $1,549 bringing the Basic Personal Amount to $15,705. For 2025, the additional amount is $1,591 bringing the Basic Personal Amount to $16,129.

The additional amount is gradually reduced with income in excess of $177,882 ($173,205 in 2024), and reduced to zero when income reaches $253,414 in 2025 ($246,752 in 2024).

Government of Canada – Non-refundable and refundable tax credits

Vehicle Expense Deduction

Posted on by david

Many of our clients are confused with how the vehicle expense deduction works.  Please note that we usually refer to it as a ‘mileage deduction’, even though we use kilometres… we’re weird like that. 

How Does Mileage Deduction / Vehicle Expense Deduction Work?

Any corporation can reimburse you, as an employee, on a per-km basis. 

This reimbursement is tax-free to you, to a maximum of $0.72/km for the first 5,000km’s and $0.66/km thereafter (in 2025). 

Note that the rates usually change annually.

Tracking & Submitting Mileage Deductions

All you need to do here is track your mileage and submit it to your employer. 

All of your vehicle costs are paid out of your own pocket and unless the per km reimbursement is unreasonable (say $0.10/km), you are not allowed to deduct any vehicle costs that you paid personally, because you got a tax-free reimbursement from your employer to offset the costs.

This is often the most advantageous and efficient way for an owner of their own corporation to reimburse themselves for their vehicle usage.

Monthly Allowance For Mileage

On the other hand, if you are an employee, and your employer requires you to drive your own vehicle for work purposes (gives you a T2200), but doesn’t reimburse you on a per km basis like above, (say they give you a monthly allowance of $500/month instead), then things work differently. 

This monthly allowance is included on your T4 slip and therefore added to your total taxable income.

However, to offset this, you can deduct your actual vehicle expenses from your taxable income.

How Much Do I Deduct For Vehicle Expenses?

The amount to deduct is based on your total vehicle expenses, multiplied by the number of business km’s / total km’s.

This is referred to as an employment expense deduction. You still have to track your mileage, but it works a bit differently. You have to now track your total mileage for the year AND your business-use mileage for the year. 

You can use our template to help calculate this

Self-employed people would also have to track their mileage and all vehicle expenses the same way as above. They take all of their vehicle costs and prorate by the business use mileage over their total mileage.

What is Considered Business Use?

Well, this is not an easy question to answer, but basically, it is NOT to and from your work, or what is referred to as your regular place of employment – CRA considers that personal-use. 

However, if you go to your office, and then out to a client, or vice-versa, that is business-use.

If you drive directly to a client’s place of business and back home, that is business-use.

If you drive throughout the day from customer to customer, that is business-use.

If you pick up a coffee on your way to the office, that’s personal.

Things get a bit tricky when you have multiple places of regular employment or long-term job sites.

Medical mileage

This is really rare, and I’ve only seen it maybe half a dozen times, but if you require medical treatments that are not available in your vicinity and you need to travel more than 40km’s to a hospital or a specialist, and there is no reasonable public transit option, then you can claim vehicle expenses as medical expenses. You’d only be tracking your actual medical-rated mileage here.

The rules here are complicated, so call us if this applies to you.

Contact SSL Group in Barrie or Newmarket today.

HST Quick Method

Posted on by david

Correctly calculating and remitting HST to the CRA can become a time-consuming task for small to medium-sized businesses even when they have a dedicated accounting department.

If done incorrectly, it can lead to audits and other issues. To simplify the process, the CRA has introduced a “Quick Method” of accounting for HST.

What is the benefit of the Quick Method?

Not only is this method simpler but it can save you money, especially if you have limited taxable expenses or most of your expenses are salaries.

Normally, you collect HST on your sales of goods and services. From this amount, you deduct the HST that you pay on purchases of goods and services, called Input Tax Credits, or ITC’s. 

The difference gets remitted to the CRA. 

Under the Quick method, you still charge the standard HST rate (13% in Ontario) on any taxable supplies of goods or services. 

However, you are not entitled to claim any HST you pay on goods or services as you normally would, except for capital asset purchases (such as computers and vehicles).

So, why would you do this?

Well, under the Quick Method, you only have to remit a portion of the 13% you collect from your customers. 

The rates for remittance are: 

  • 4.4% for businesses that purchase goods for resale (antique dealers, convenience stores)
  • 8.8% for businesses that provide services

In addition, CRA allows a 1% credit on sales up to a maximum of $30,000 per fiscal year.

Here’s an example:

Bobby’s corporation Bobby Inc. has consulting revenues of $100,000, and $10,000 of HST-eligible expenses.

  • The regular method would have led to a remittance of: $100,000 x 13% = $13,000
    Less ITCs $10,000 x 13% = ($1,300)
    Amount to be remitted to CRA = $11,700
  • Using the Quick Method, the calculation is: $100,000 x 1.13 = $113,000 x 8.8% = $9,944                                                            
    Less Credit 1% of $30,000 = ($300)
    Amount to be remitted to CRA = $9,644

In this example, Bobby Inc. will save $2,056, which is included in the corporation’s income.

Now, The Quick Method isn’t available for everyone. For example, lawyers, accountants, bookkeepers, and financial consultants are among those not permitted to use it.

Furthermore, since the Quick Method is geared for small businesses if a business has revenues in excess of $400,000, the Quick Method is not permitted. Also, there are complicated rules for when the election can be made.

In conclusion, the Quick Method can save you a lot of time and money should it be implemented properly.

For help determining if this method is useful for your circumstances please contact us so we can analyze your unique situation.

Disclaimer

  1. This post is only applicable to corporations in Ontario
  2. The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. SSL Group will not be held liable for any problems that arise from the usage of the information provided on this page.

For more information on the HST Quick Method, contact SSL Group in Barrie or Newmarket today.

Trust Reporting Requirements

Posted on by david

UPDATE: August 12, 2024

The Department of Finance recently proposed additional relief for bare trusts, aiming to give trustees extra time to adjust to new reporting requirements. The proposal suggests that bare trusts would not need to file a T3 return for the 2024 tax year. Furthermore, Finance intends to permanently exempt certain categories of bare trusts from these reporting requirements.

This proposal was included in draft legislation released on August 12, 2024. If enacted, these adjustments would reduce the number of bare trusts required to file trust returns compared to the current rules, although many common bare trusts would still not qualify for any proposed exemptions.

The proposed changes include temporary relief from filing a 2024 T3 return for bare trusts and propose that certain types of bare trusts would be exempt from filing obligations starting with the tax year ending December 31, 2025. Additionally, the proposals clarify the criteria for what constitutes a “bare trust” for reporting purposes.

Proposed exemptions to filing T3 returns:

Starting with the 2025 tax year, certain bare trusts may be exempt from filing a T3 return if, throughout the year:

  • All beneficiaries are legal owners of the trust property, and all legal owners are also beneficiaries.
  • All legal owners are related individuals, and the property qualifies as real estate eligible to be designated as a principal residence for at least one of these owners.
  • A legal owner is an individual holding real estate solely for the benefit of their spouse or common-law partner, and that property could be designated as the owner’s principal residence.
  • Each legal owner is a partner (not a limited partner) holding property exclusively for the partnership’s benefit, and at least one partner is obligated to file a partnership information return.
  • The property is held by a legal owner in accordance with a court order.
  • A non-profit organization holds funds from federal or provincial governments for the benefit of other non-profits.

Under these proposals, certain common bare trusts may be exempt from T3 filing, such as:

  • Spouses with a joint bank account for their mutual benefit.
  • A parent on the title of a child’s primary residence to help secure a mortgage.
  • Spouses living in a jointly occupied family home where only one is on the title but it can be designated as a principal residence.

However, some bare trusts would not qualify for these exemptions. For example, where an adult child has been added to a parent’s bank or investment account to help administer it, or an in-trust account for a minor or an adult child.

The Department of Finance also suggested expanding exemptions from filing the T3 Schedule 15 which requires the disclosure of detailed information for each trustee, beneficiary and settlor of the trust, as well as any person who has the ability to exert influence over trustee decisions regarding the allocation of trust income or capital in a year. To be exempt from filing the T3 Schedule 15, the trust must meet the following conditions:

  • Each trustee of the trust is an individual;
  • Each beneficiary is an individual who is related to the trustee; and
  • The total fair market value of the trust’s property does not exceed $250,000 throughout the year, and the trust’s only assets held throughout the year are one or more of the following:
    • Cash;
    • A guaranteed investment certificate (GIC) issued by a Canadian bank or trust company;
    • A debt such as a bond or debenture issued by a government agency where the interest is fully exempt interest;
    • A debt obligation, such as a bond issued by:
      • A Canadian publicly traded corporation, mutual fund trust or partnership;
      • A foreign publicly traded corporation; or
      • A Canadian branch of a foreign bank.
    • A share or debt listed on a designated stock exchange;
    • A share of a mutual fund corporation;
    • A unit of a mutual fund trust;
    • An interest in a related segregated fund trust;
    • An interest as a beneficiary under a publicly traded trust;
    • Personal-use property of the trust; or
    • A right to receive income on property described above.

As a result, smaller trusts without any corporate trustee, corporate beneficiary and assets that meet the above criteria with a total fair market value of $250,000 or less would be exempt from the enhanced reporting requirements (Schedule 15).

Moreover, amendments have been proposed for smaller trusts that hold assets with a total fair market value of $50,000 or less to also be exempt from the enhanced reporting requirements even if those trusts have corporate trustees or whose beneficiaries may not be an individual who is related to each trustee. Under the existing legislation, the “small trust” exception only applied where the trust held certain types of property; the proposed amendments have removed any exclusions based on the types of property held for the “smaller” trusts.

Even if a trust qualifies for a T3 Schedule 15 exemption, it may still need to file a T3 return for that tax year.

Navigating the New Trust Reporting Rules in Canada with In-depth Insights on Bare Trusts

The Canadian government’s new trust reporting rules, effective from the 2023 tax year onward, aim to enhance transparency and ensure accurate reporting of income generated within trusts. These changes apply to various trust structures, including family trusts, testamentary trusts, alter ego trusts, and notably, bare trusts. T3 Returns and disclosure forms for taxation years ending on or after December 31, 2023, must be filed by April 2, 2024.

Key Highlights:

Enhanced Disclosure Requirements: All trusts, including bare trusts, must adhere to more detailed reporting. This includes identifying trustees, beneficiaries, and settlors, including names, addresses, and Social Insurance Numbers. Specific transactions and events, such as distributions and contributions, must also be reported. Under these rules, beneficiaries include persons who currently have a right to income or capital as well as those having residual or contingent interests. As a result, some beneficiaries might not know that they have an interest in the trust, which could cause issues when collecting information from them.

A trust would be considered to have met the reporting requirements if it provides this information for each trust beneficiary whose identity is known or ascertainable, with reasonable effort at the time of filing. For beneficiaries whose identities are not known or ascertainable, a trust can comply by supplying sufficiently detailed information on the T3 return to determine with certainty whether any particular person is a beneficiary.

Penalties: The updated reporting rules also introduce a new penalty for non-compliance: either $2,500 or 5% of the property’s value, whichever is greater. This is in addition to the existing penalties for the failure to file a trust return. In guidance issued on December 1, the CRA announced that no penalties would be imposed for submitting a trust return and a Schedule 15 for bare trusts after the 2023 tax year deadline. It’s important to note that the filing requirement remains in place, and penalties may be applied for knowingly or grossly negligent failures to file, according to the CRA. Recognizing that the 2023 tax year marks the first instance where bare trusts must file a T3 return with the new Schedule 15, the CRA is taking an education-first approach to compliance and offering proactive relief to address potential uncertainties among bare trusts about these new requirements.

Common Exceptions:

  • Trusts which have been in existence for less than three months at the end of the year;
  • Trusts which hold less than $50,000 in assets throughout the taxation year (provided their holdings are confined to cash, certain debt obligations, and listed securities)
  • Estates that qualify as graduated rate estates during the initial 36 months after the individual’s death
  • Trusts that qualify as non-profit organizations or registered charities

Insights on Bare Trusts – Real-Life Examples: Bare trusts are a simple concept; it is where one person’s name is shown as the owner of an asset, but the asset truly belongs to someone else. The trustee is merely vested with legal title and has no independent duties or powers concerning the trust property. The trustee’s sole responsibility is to deal with the property as the beneficiary directs. The beneficiary retains the full beneficial ownership of the property in question, and, as a result, the income and gains realized on the trust property are taxed in the beneficiary’s hands.

Adding Children on Title to a Family Home or Cottage:
Scenario: Parents put property in their children’s names for estate planning purposes, or to minimize probate tax, with the parents retaining beneficial interest.

This joint ownership typically results in the creation of a bare trust, where the adult child becomes the trustee, holding legal title but with limited authority. The parent, as the settlor and sole beneficiary, retains control over decisions related to the property. The adult child acts solely on the parent’s instructions and cannot take any action without their direction.

For instance, if the parent decides to sell the family home, the adult child’s role is to convey legal title based on the parent’s instructions. The proceeds from such a sale entirely benefit the parent.

Reporting Obligation: The bare trust, in this case, involves children holding legal title while the parents are the settlors and the beneficiaries. The children must report the details of the property and the beneficial interest held by the parents.

Parents Holding Partial Title on Children’s Property:
Scenario: Parents and children jointly own a property, with each party having a distinct share in the property.

In the current competitive real estate market, it’s not uncommon for parents to agree to be included on the deed and mortgage for their adult child’s home. This helps facilitate the child’s eligibility for a mortgage even though the parents haven’t financially contributed to the purchase and won’t have any active responsibilities concerning the property. In this case, it is likely a bare trust has
been created.
Reporting Obligation: In this scenario, each party’s ownership interest must be disclosed. The trustees, in this case, are both the parents and the children and the reporting should outline the specifics of each party’s share.

Joint Bank Accounts:
Scenario: A parent includes their child as a joint owner of a bank account, allowing the child to assist with tasks like bill payments and other banking matters on behalf of the parent. Both individuals acknowledge that the funds in the account are intended exclusively for the parent’s benefit.

Reporting Obligation: The trust reporting requirements may extend to joint bank accounts where one party holds legal title, and the other party is a beneficiary. The details of the account, including transactions and beneficial interests, must be accurately reported.

In-Trust-For Accounts:
Scenario: A parent deposits money into an “in-trust” account for the benefit of a minor family member. In this arrangement, the minor, designated as the beneficiary, has the right to close the account and access all funds once they reach the age of 18.

Reporting Obligation: The trust reporting requirements may extend to informal “in-trust-for” accounts where one party holds legal title, and the other party is a beneficiary. The details of the account, including transactions and beneficial interests, must be accurately reported.

Conclusion
Staying informed about the new trust reporting rules, especially concerning bare trusts, is critical for trustees. It is crucial to note that bare trusts will now be required to file a T3 tax return, adhering to the enhanced disclosure requirements outlined by the Canadian government. Our team is here to support you in adapting to these changes and ensuring a seamless transition. If you have any questions or require further clarification on how these changes may impact your specific bare trust situation, please do not hesitate to reach out to us. We are committed to assisting you in navigating the evolving landscape of
tax regulations.

First Home Savings Account

Posted on by david

Beginning in 2023, Canadians planning to buy their first home may open a First Home Savings Account (FHSA). This is a registered savings plan for any Canadian, over the age of 18, who has not previously owned a home that they have resided in for the past four years.

The FHSA begins when you first open an account; it does not begin automatically. It is therefore important that you open your FHSA immediately if you plan on purchasing a home in the short-term, even if you don’t have funds to contribute in the first year. And when you do open a FHSA, you must file your income tax return for that year. Accounts may be opened through a FHSA issuer, such as a bank, credit union, or a trust or insurance company.

You may carry forward up to $8,000 of your unused annual contribution amount to use in a later year (subject to the $40,000 lifetime contribution limit). For example, if you open an FHSA in 2025 and contribute $5,000, you can contribute up to $11,000 in 2026. Carry-forward amounts do not start accumulating until after you open an FHSA.

Don’t have $8,000?  No problem. You can transfer amounts from your RRSPs to your FHSAs without any immediate tax consequences, as long as it is a direct transfer. These transfers are subject to FHSA annual and lifetime contribution limits and are not deductible from income.  Transfers from an RRSP to an FHSA do not restore your RRSP contribution room.

First Home Savings Accounts can be used to invest in Stocks, ETFs, options and much more just like a TFSA or RRSP. In essence, the FHSA is similar to TFSA and RRSPs, but specifically for people looking to buy their first home. You can also continue to contribute until you’ve reached the lifetime limit, or 15 years after the account’s initial opening.

The FHSA is different from an RRSP Home Buyers’ Plan which allows you to withdraw up to $35,000 from your RRSP to help you buy your first home. The money must be repaid to your RRSP within 15 years, otherwise it is included in income. For details visit our Home Buyers’ Plan page.

To be eligible, you must not have owned real property including a condominium or house solely or jointly with a spouse or common-law partner within the last four years. Your spouse or common-law partner also may not own your current primary residence.

For more details on the FHSA, call us at 905-898-4900, or check out CRA’s page

Registered Retirement Savings Plan (RRSPs)

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Contribution Deadline

The deadline for contributing to your 2025 RRSP is March 3, 2025.

Contribution Limits

The basic overall 2024 limitation for individuals (regardless of whether or not they are members of a pension plan) is the lesser of $31,560 and 18% of earned income (based on 2023 income). The contribution limit is reported on your latest notice of assessment or notice of reassessment. Your contribution limit can be confirmed by calling Canada Revenue Agency’s T.I.P.S. service at 1 (800) 267-6999. You will be asked for your SIN, month and year of birth and your net income from your 2022 return. In addition, information on your RRSP can be obtained through the internet at my account.

For members of company pension plans, the limitation will be reduced by the “pension adjustment” as calculated by their employer and reported on their T4. The pension adjustment represents the value of pension benefits accruing to the employee for the year, as well as any past service pension adjustments.

Future years’ contribution limits have been established as follows:

2025  $32,490

2026  $33,810

Age Limit

The year you turn 71 is the last year you can make a contribution to your RRSP. If you contribute to a spousal RRSP, your spouse must be 71 or younger on December 31 of the year you make the contribution.

Spousal RRSP’s

A spousal RRSP names your spouse as the annuitant of a plan to which you have made a contribution and taken a deduction.

  • This is effective as an income splitting vehicle in retirement years
  • Spousal contributions are subject to the same contribution limits as those of your own plan
  • Attribution of income will occur if funds are withdrawn from any spousal RRSP within the calendar year that the contributions were paid or either of the two following years

Home Buyer’s Plan

See separate page

Conversion

An RRSP must be converted to a Registered Retirement Income Fund (RRIF) by the end of the year in which you turn 71

RRIF owners are required to withdraw a minimum amount each year, starting the year after the RRIF is established. To obtain the amount which has to be withdrawn, please contact us at 905-898-4900

Miscellaneous

Over-contributions in excess of $2,000 are subject to a 1% per month penalty

Contributions early in the year maximize tax-free earnings in the plan

Late contributions minimize the time lag between cash outflow and potential tax refunds

RRSP Decisions

Is it better to invest in RRSPs or in a non-registered account?

Are you better off to pay down your mortgage, or contribute to an RRSP?

Should you borrow to contribute to an RRSP?

Which investments should be held inside vs. outside the RRSP?

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