TaxMatters@EY – March 2025

Alan Roth, Toronto

As the 2024 personal income tax return (T1 return) filing deadline quickly approaches, it’s time to reflect on the year that ended and complete your T1 return. That means it’s also time for EY’s annual list of tax filing tips and reminders that may save you time and money.

For tips and reminders on certain tax deductions and credits, see “Spotlight on personal tax deductions and credits that may be claimed on your 2024 T1 return” in this issue.

Personal tax filing tips for 2024 T1 returns

No matter what, file on time: Generally, your T1 return must be filed on or before April 30. If you, or your spouse or common-law partner, are self-employed, your return deadline is June 15, but any taxes owing must be paid by the April 30 deadline. Since June 15 falls on a Sunday in 2025, the 2024 T1 return filing deadline for self-employed taxpayers or their spouses or common-law partners is extended to Monday, June 16, 2025.

Failure to file a T1 return on time can result in penalties and interest charges. Even if you are not able to pay your balance by the deadline, you should still file your T1 return on time to avoid penalties. For 2024 returns, interest and penalty relief will be available for T1 filers impacted by the government’s announcement to defer the increase in the capital gains inclusion rate – see “Proposed capital gains inclusion rate changes are deferred” (below).  

If you expect a refund, you should still file on time in case a future change or assessment results in a tax liability for the year. Filing on time also ensures you receive any benefit or credit entitlements (such as the Canada Child Benefit or GST/HST credit) in a timely manner. Remember, if you wait more than three years after the end of the year to file a T1 return claiming a refund, your right to the refund expires and will be subject to the Canada Revenue Agency’s (CRA’s) discretion.¹

Review your 2023 T1 return: Reviewing your 2023 T1 return and notice of assessment or reassessment is a great starting point before you complete and file your return. Determine if you have any refund interest that was received on an overpayment of prior-year taxes that needs to be included in income on your 2024 T1 return, or if you have any carryforward balances that may be used as deductions or credits in your 2024 T1 return.

Carryforward amounts could include unused registered retirement savings plan (RRSP) contributions, unused tuition, education and textbook amounts,² interest on student loans, capital losses or other losses of prior years, resource pool balances and investment tax credits.

Proposed capital gains inclusion rate changes are deferred: As discussed in TaxMatters@EY, December 2024, “Asking better year-end tax planning questions – part 2”, the 2024 federal budget and corresponding draft legislation introduced an increase in the capital gains inclusion rate — the proportion of realized capital gains included in calculating your income — from one-half to two-thirds, effective for dispositions of property occurring on or after June 25, 2024. However, for individuals and certain trusts, a proposed annual capital gains reduction would effectively reduce the capital gains inclusion rate to one-half on up to $250,000 in net capital gains realized in a year.

The December 2024 TaxMatters@EY article also discussed the impact of these proposals on the employee stock option benefit deduction, namely that this deduction would decrease from one-half to one-third of the stock option benefit for stock options exercised after June 24, 2024.³ However, an increased deduction equal of one-half of the stock option benefit could be claimed on up to a combined annual limit of $250,000 for both employee stock option benefits and net capital gains realized.

On January 31, 2025, the federal government announced a deferral of the implementation of the proposals. The Québec government also announced it will harmonize with the deferral. As a result, the increase in the capital gains inclusion rate and related rules will only be effective for dispositions of property occurring on or after January 1, 2026, and only if the proposed increase remains in place.^4,5

So if you realized capital gains in 2024, they will be taxed and reported in the same manner as in the previous year, since the federal and Québec governments are reverting to administering the current capital gains inclusion rate of one-half for the 2024 taxation year.

Despite the deferred implementation of the increase, the proposed increase in the lifetime capital gains exemption, to $1.25 million, will remain effective as of June 25, 2024.

The CRA also stated it will grant relief in respect of late-filing penalties and arrears interest until June 2, 2025 for impacted T1 filers to give them more time to report capital dispositions to meet their tax filing obligations. Revenu Québec has announced similar relief.

For more information, see EY Tax Alert 2025 Issue No. 6.

Capital gains are reported on Schedule 3 of the T1 return and the taxable portion — at the one-half inclusion rate — is included in income on Line 12700.

Charitable donations: The deadline for making charitable donations that qualify for the charitable donations tax credit for the 2024 taxation year has been extended from December 31, 2024 to February 28, 2025. The government first announced this measure on December 30, 2024, and corresponding draft legislation was released on January 23, 2025.⁶ The CRA has confirmed it will administer the extension of the charitable donation deadline based on the draft legislation.

The extension of the deadline will apply to eligible cash gifts — including gifts made by cheque, credit card, money order or electronic payments — but will not include gifts in kind, such as gifts of shares or other capital property, gifts made through a payroll deduction or gifts made by the will of someone who died after 2024.

If you made a charitable donation in January or February 2025 that’s eligible for the extension, you will have the option of claiming the gift’s eligible amount on either your 2024 T1 return or your 2025 return, or carrying it forward to a later year under the five-year carryforward rule.

Charities are not required to issue donation receipts specific to the extension period. Therefore, it will be important for individuals to track separately any 2025 donations made before March 2025 that they choose to claim on their 2024 T1 return and ensure these donations are not inadvertently claimed a second time on their 2025 return or within the five-year carryforward period. Consistent with prior years, donors are advised to keep all official donation receipts in case the CRA requests copies of them.

See EY Tax Alert 2025 Issue No. 5 for more information.

Charitable donations are claimed by completing Schedule 9, Donations and gifts, and claiming the charitable donation tax credit on Line 34900 of the T1 return. For further tips on charitable donations, see “Spotlight on personal tax deductions and credits that may be claimed on your 2024 T1 return” in this issue.

Alternative minimum tax: Significant changes affecting the calculation of the alternative minimum tax (AMT) are effective for 2024 and later taxation years.

The AMT is designed to ensure individuals, including certain trusts, with high gross income, who would otherwise pay little or no income tax because they have a significant number of certain tax preference items, pay at least a minimum amount of tax for the year. Tax preferences are specific items that reduce taxable income or tax payable, such as the non-taxable portion of capital gains or the tax credit for political donations.

AMT is calculated on Form T691, Alternative minimum tax, of the T1 return. For details on the revisions to the AMT regime, see TaxMatters@EY, December 2024 “Asking better year-end tax planning questions – part 2.”

Repayment of COVID-19 benefits: If you received COVID-19-related government benefits in 2020, 2021 or 2022, you were taxed on those benefits in the year of receipt. But if you are required to repay any benefits — that is, it’s determined later you were not eligible for them — you can only claim a deduction in the year of repayment.⁷

Repayments made in 2024 of federal, provincial or territorial COVID-19 benefit program amounts are deducted on line 23200 of your 2024 T1 return.

Electronic payments and remittances: If you have a balance of income tax owing upon filing your 2024 T1 return, or if you have installment payments to make in 2025, note that as of January 1, 2024, remittances over $10,000 must be made electronically unless the payer or remitter cannot reasonably satisfy this requirement. A penalty of $100 applies for each failure to comply with this new requirement. However, the CRA is providing a grace period before it begins to enforce the application of this penalty. The CRA has stated that “the option to send payments by cheque will remain available to taxpayers for the foreseeable future.” In the meantime, the CRA will be educating taxpayers on electronic payment options and encouraging them to make payments in this manner.

Home office expenses:  Employees must use the traditional detailed method for claiming specific eligible home office expenses paid in 2024 in the course of earning employment income.⁸ In addition, their employer must review and sign a completed Form T2200, Declaration of Conditions of Employment.

You may claim home office expenses if you worked from home in 2024 and you were required by your employer to do so. In addition, you must have worked from your workspace at home in the course of earning employment income more than 50% of the time for at least four consecutive weeks in the year, or you must have used the workspace exclusively to earn employment income and for regularly and continually meeting clients, customers or other persons in the ordinary course of your employment duties.

If you only worked from home more than 50% of the time for part of the year — for a period of at least four consecutive weeks but less than the entire year — you can only claim the eligible expenses you paid for that period. You must have paid for the expenses related to your workspace and not have been reimbursed by your employer for the home office expenses incurred. The requirement to work from home does not have to be part of your employment contract and may arise, instead, from a written or verbal agreement. If you have voluntarily entered into a formal telework arrangement with your employer in 2024, you are considered to have been required to work from home.⁹

The types of expenses that may be claimed by employees are limited. For details on both eligible and non-eligible expenses, see the CRA’s website page, “Expenses you can claim”.

As noted above, to claim home office expenses, the employee must obtain from their employer a completed and signed Form T2200.¹⁰ An employee who needs to claim other types of employment expenses in addition to home office expenses (e.g., motor vehicle expenses), must also obtain and complete this form. Form T2200 has been updated for the 2024 taxation year. If you are only using this form to claim home office expenses, you only have to complete questions 1 to 5 in Part C, Conditions of employment.

The computation of the deductible portion of expenses is calculated on Form T777, Statement of employment expenses, which must be filed with the T1 return.

Tax on split income: The tax on split income rules limit income splitting opportunities with children and certain adult family members for income derived directly or indirectly from a private corporation. Income that is subject to tax on split income is taxed at the highest marginal personal income tax rate and is calculated on Form T1206, Tax on Split Income. For more information on the revised rules, see “Asking better year-end tax planning questions – part 1” in the November 2024 issue of TaxMatters@EY.

Principal residence sale — reporting required, even if all gains are exempt: Capital gains realized on the sale of your residence may be exempt from tax if the residence qualifies as, and is designated as, your principal residence. No tax is owed, for example, if your residence is designated as your principal residence for each year that you owned it. However, you are required to report the disposition of a principal residence on your T1 return, whether the gain is fully sheltered or not.

For 2023 and later years, the tax rules prohibit the principal residence exemption from being claimed on profits that are realized on the disposition of residential real estate in Canada, including a rental property, that was owned for fewer than 365 consecutive days. In this situation, the profits are treated as taxable business income, subject to certain exceptions, including exceptions for dispositions that occurred due to certain life events. For more information on these rules, see “Asking better year-end tax planning questions – part 1” in the November 2024 issue of TaxMatters@EY, and “Focus on Housing” in the February 2023 issue.

The sale of your principal residence must be reported, along with the principal residence designation, on Schedule 3, Capital Gains (or Losses), of your T1 return. In addition, you must also complete Form T2091, Designation of a property as a principal residence by an individual (other than a personal trust). The year of acquisition, proceeds of disposition and a description of the property must be included on the form.

If the gain is fully sheltered, you only need to complete the first page of Form T2091 and no gain needs to be reported on Schedule 3. However, the appropriate box (box 1) still needs to be ticked in the principal residence designation section on page 2 of Schedule 3. If the gain is not fully sheltered, then any capital gain remaining after applying any available principal residence exemption (as calculated on Form T2091) must be reported on Schedule 3.

There is generally a time limit for the CRA to reassess a T1 return. The normal reassessment period for an individual taxpayer generally ends three years from the date the CRA issues its initial notice of assessment. However, if you do not report the sale of your principal residence (or any other disposition of real property) in your T1 return for the year in which the sale occurred, the CRA will be able to reassess your return for the real property disposition beyond the normal reassessment period.

Noncompliant short-term rentals: Net income earned from a rental property is generally calculated on Form T776, Statement of Real Estate Rentals, and then reported on Line 12600 of your T1 return.¹¹ Form T776 reports the rental revenue included in income for the taxation year less all deductible rental expenses incurred.

As discussed in TaxMatters@EY, December 2024, “Asking better year-end tax planning questions – part 2,” a new restriction denies the deduction of all rental expenses incurred for noncompliant short-term rentals, applicable to expenses incurred on or after January 1, 2024. A noncompliant short-term rental is a Canadian residential property that is offered for rent for a period of fewer than 90 consecutive days, and either:

• The property is located in a province or municipality that permits such rentals but there is a failure to comply with all provincial or municipal licensing, permitting or registration requirements.¹²
• The property is located in a province or municipality that has prohibited short-term rentals.

If you earned rental income from a residential property in 2024, you will not be able to claim any related rental expenses on Form T776 for the period of the year the property was a noncompliant short-term rental.¹³

You will need to complete Charts A and B on the 2024 version of Form T776 to compute the nondeductible portion of related rental expenses, including the nondeductible portion of any capital cost allowance claims.

Additionally, the 2024 version of the form was updated to require rental property owners to report both their gross rental revenues for all units and total expenses, and gross rental revenues and expenses related to short-term rental units, even if the short-term rentals are compliant.

For more information, see also TaxMatters@EY, June 2024, "New measures to address housing supply shortage and affordability.”

T1135 — remember your foreign reporting: If at any time in the year you own certain specified foreign property with a total cost of more than CDN$100,000, you are required to file Form T1135, Foreign Income Verification Statement. This form may be filed electronically. Failure to report foreign property on the required information return may result in a penalty. Failure to file Form T1135 on time may result in a penalty equal to $25 for each day the failure continues, for a maximum of 100 days ($2,500), or $100, whichever amount is greater. More significant penalties may apply if a person knowingly, or under circumstances amounting to gross negligence, fails to file the form. In addition, if Form T1135 is not filed on time or includes incorrect or incomplete information, the CRA can reassess your T1 return for up to three years beyond the normal reassessment period.

Reportable property generally includes amounts in foreign bank accounts and shares or debts of foreign companies, as well as other property situated outside Canada. It does not include property used in an active business, shares or debt of a foreign affiliate or personal-use property.

Capital losses: Capital losses realized in the year may only be applied against capital gains. Net capital losses may be carried back three years, and losses that cannot be carried back can be carried forward indefinitely.

Where capital losses are incurred on certain shares or debt of a small business corporation, they may qualify as business investment losses that may be claimed against any income in the year, not just capital gains.

Pension income splitting: If you received pension income in 2024 that is eligible for the pension income credit, up to half of this income can be reported on your spouse’s or common-law partner’s T1 return.

You’ll reap the greatest benefits when one member of the couple earns significant pension income while the other has little or no income. In some cases, transferring income from a lower-income pension recipient to a higher-income spouse can carry a tax benefit.¹⁴

Digital news subscription tax credit (last year to claim): The 2024 taxation year is the last year you may claim this temporary 15% non-refundable tax credit for eligible digital news subscriptions, for a maximum amount of $500 (a maximum federal tax credit of $75). The credit applies to eligible amounts paid after 2019 and before 2025.

Eligible digital news subscriptions are subscriptions that entitle an individual to access content that is primarily original written news provided in digital form by a qualified Canadian journalism organization, as defined under the relevant legislation, that does not hold a broadcasting licence.

The credit is limited to the cost of a comparable standalone digital subscription where the subscription is a combined digital and newsprint subscription. If there is no such comparable subscription, individuals are limited to claiming one-half of the amount actually paid.¹⁵

Claim all your deductions and credits: Remember to take advantage of the various family-related tax credits that might apply to you. See the “Spotlight on personal tax deductions and credits that may be claimed on the 2024 T1 return” article in this issue of TaxMatters@EY for details.

…or not: You may be able to increase the tax benefit of certain discretionary deductions if you defer them to a later date:

• Discretionary deductions that may be deferred include RRSP contributions and capital cost allowance.
• Similarly, consider accumulating donations over a few years and claiming them all in one year to increase your benefit from the high-rate donation credit which is available for donations made within the five preceding years.
• Deferring deductions and certain credits makes sense if you are unable to use all applicable non-refundable tax credits in 2024 (and they cannot be transferred), or if you expect to earn higher income in the future.

File a T1 return to obtain certain benefits or credits

File T1 returns for children: Although often unnecessary, in many cases there are benefits to filing T1 returns for children. If your children had part-time jobs during the year or have been paid for various small jobs, such as babysitting, snow removal or lawn care, by filing a T1 return they report earned income and thus establish contribution room for purposes of making RRSP contributions in the future.

Another advantage of filing T1 returns for teenagers is the availability of refundable tax credits. Several provinces offer such credits to low- or no-income individuals. When there is no provincial tax to be reduced, the credit is paid out to the taxpayer. There is also a GST/HST credit available for low- or no-income individuals over age 18.

File a T1 return to obtain the Canada carbon rebate:¹⁶  This is a tax-free federal benefit with payments made quarterly to eligible individuals 19 years of age or older who are resident in Alberta, Ontario, Manitoba, Saskatchewan, Nova Scotia, Newfoundland and Labrador, Prince Edward Island or New Brunswick on the first day of the payment month and the last day of the previous month.

Eligible individuals in all these provinces must file their 2024 T1 return to receive their payments in respect of the 2024 taxation year.¹⁷ The amount of the benefit varies according to the province of residence, and additional amounts may be claimed for a cohabiting spouse or common-law partner and for any children under the age of 18.

A supplement equal to 20% of the baseline benefit amount may be claimed by checking the box on page 2 of the T1 return by an eligible individual who resides outside of a census metropolitan area or in a small or rural community.¹⁸

If the individual is married or living common law and they and their spouse or partner were both living in the same small or rural community, the individual and their spouse or partner must both check the box on their respective T1 returns. The payments will be made to the spouse or partner whose T1 return is assessed first. Residents of Prince Edward Island are automatically eligible for the supplement and are, therefore, not required to tick the box on their T1 return.

Tips for self-employed individuals

Capital cost allowance claims: If you are a self-employed individual earning unincorporated business, professional or rental income, you are entitled to claim capital cost allowance (CCA) on depreciable capital property if the property is available for use to earn such income. You are required to report your business or professional income and deductible expenses on Form T2125, Statement of Business or Professional Activities.

Likewise, if you earn income from a rental property, your rental income and deductible expenses are reported on Form T776, Statement of Real Estate Rentals. CCA is claimed on these forms.

However, CCA claims and other expenses related to noncompliant short-terms rentals are denied. See Noncompliant short-term rentals above.

The accelerated investment incentive property rules significantly accelerate CCA for most depreciable capital properties until, and including, 2027. Certain properties such as manufacturing and processing machinery and equipment were eligible for full expensing in the year of acquisition, on a temporary basis (up to and including 2023).¹⁹

The accelerated CCA rules apply to eligible property acquired and available for use after November 20, 2018, subject to certain restrictions. The immediate expensing rules also provide for a temporary expansion of assets eligible for full expensing, up to a maximum of $1.5 million per taxation year. These rules apply to certain designated property that is acquired by a Canadian-resident individual after December 31, 2021 and that becomes available for use before January 1, 2025.

Full expensing of zero-emission vehicles was also available under the CCA rules for eligible vehicles that were purchased and became available for use in a business or profession after March 18, 2019, and before 2024, subject to certain restrictions such as a cap on the cost of passenger vehicles.²⁰ Accelerated CCA deductions will be available for zero-emission vehicles that become available for use in a business or profession between 2024 and the end of 2027.²¹

For further details on the availability of accelerated CCA claims or the temporary immediate expensing of certain assets as noted above, see “Asking better year-end tax planning questions – part 1” in the November 2024 issue of TaxMatters@EY, as well as EY Tax Alert 2024 Issue No. 63, EY Tax Alert 2022 Issue No. 30, EY Tax Alert 2021 Issue No. 24, EY Tax Alert 2019 Issue No. 27, and EY Tax Alert 2018 Issue No. 40.

Capital gains exemption on qualifying transfers to an employee ownership trust: There is a temporary exemption from taxation of the first $10 million in capital gains realized on the sale of a business to an employee ownership trust, applicable to qualifying business transfers that occur between January 1, 2024 and December 31, 2026, subject to several conditions being met.²²

As discussed in TaxMatters@EY, December 2024, “Asking better year-end tax planning questions – part 2,” an employee ownership trust is a new type of trust intended to give business owners an alternative succession option. Recent amendments, effective January 1, 2024, give qualifying business owners the option of using such a trust to sell their business to employees. This type of trust is a form of employee ownership where the trust holds shares of a corporation for the benefit of the corporation's employees.

If you realized a capital gain in 2024 on a qualifying transfer of a business to an employee ownership trust, you may claim the capital gains exemption on line 25395 of your T1 return.

For more information on EOTs and the temporary capital gains exemption, see the December 2024 TaxMatters@EY article noted above, and also EY Tax Alert 2023 Issue No. 47 and EY Tax Alert 2024 Issue No. 29.

Sellers on digital platforms: If you earn revenue from selling goods or services, or renting real property, on a reportable digital platform, you may receive an annual copy of certain information relating to you that is collected and reported to the CRA by the digital platform operator for 2024 and later years. Certain exceptions apply.^{23, 24}

For the 2024 taxation year, you were required to report this information to the CRA by January 31, 2025. However, the CRA has granted an extension to digital platform operators requiring more time to meet their filing obligations for 2024.²⁵ The information includes identification information as well as activity information (e.g., the total consideration paid or credited during each quarter of the reportable period and the number of relevant activities for which it was paid or credited, and any fees, commissions or taxes that the reporting platform operator charges or withholds during each quarter of the reportable period).

The CRA is likely to use this information to ensure sellers are reporting all revenue.

If you are a seller on a reportable digital platform, consider reconciling the information the digital platform operator reports to the CRA in respect of the 2024 taxation year to the income you report on your 2024 T1 return.

For further details on reporting platform operators or reportable sellers, and on these reporting requirements, see EY Tax Alert 2024 Issue No. 62 and EY Tax Alert 2023 Issue No. 43.

2025 planning: Consider income splitting opportunities such as paying reasonable salaries to a spouse or child for services provided to your business. Or, if your business is operated through a private corporation, consider income splitting corporate earnings with adult family members, bearing in mind such opportunities are now limited due to the revised tax on split income rules. For further details, see “Asking better year-end tax planning questions – part 1” in the November 2024 edition of TaxMatters@EY.

Take advantage of technology

Use software to prepare your T1 return and file electronically. The CRA offers several online services to make managing your taxes faster and easier.

Registering for the CRA’s My Account will allow you to view prior-year T1 returns and assessments, check carryover amounts, view tax slips filed in your name, view account balances and statements of account, file T1 returns, make payments and track the status of your T1 return. It also allows you to register to receive online correspondence from the CRA within My Account, including notices of assessment, benefit notices and slips, and instalment reminders.

My Account will also allow you to use the Auto-fill my return service, which pre-populates your T1 return with figures from tax information slips and other information from CRA records if you are using NETFILE-certified software for preparing your T1 return.

You need to provide the CRA with an e-mail address to access My Account.

Certain tax preparation software products offer the CRA’s Express NOA service, which can provide you with your notice of assessment immediately after you file your T1 return electronically. You must be registered for both My Account and online correspondence with the CRA to use the Express NOA service.

The CRA’s ReFILE service allows you to file adjustments to your T1 return using NETFILE certified tax preparation software, provided your original T1 return is also filed electronically. Adjustments can be made to your 2023, 2022, 2021, or 2020 T1 return. You should receive your notice of assessment on your original T1 return first before using ReFILE to file any adjustments.

The CRA’s Check CRA Processing Times tool provides you with general processing times for T1 returns and other tax-related requests sent to the CRA.

Make time for tax planning

When your T1 return is done, you can step back and reflect on your progress toward your financial goals in the year that just ended. It’s a great primer for a meaningful conversation about tax and estate planning.

Tax season is a time when many focus a little more closely on their financial affairs. So this really is a good time to at least take a new look at the components of your financial and estate plan that could most impact your financial future and those who depend on you. It is also a great time to think of ways to save on your 2025 taxes. For tax planning tips, see our two part series on “Asking better year-end tax planning questions” in the November 2024 and December 2024 issues of TaxMatters@EY.

Get a head start on 2025 savings

Early in 2025 is a great time to think of ways to save on your 2025 taxes. Here are a few tips to help you increase your savings:

• Contribute early to RRSPs or registered education savings plans (RESPs) to increase tax-deferred growth. The 2025 RRSP contribution limit is equal to the lesser of 18% of earned income for 2024 and a maximum amount of $32,490.
• Contribute early to TFSAs to increase tax-free growth. The 2025 TFSA contribution limit is $7,000.
• Contribute early to first home savings accounts (FHSAs) to increase tax-free growth. The 2025 FHSA contribution limit is $8,000.
• Consider income-splitting opportunities such as the use of spousal RRSPs.²⁶
• If you expect to have substantial tax deductions in 2025, consider requesting CRA authorization to decrease tax withheld from your salary by filing Form T1213, Request to Reduce Tax Deductions at Source.

Alan Roth, Toronto

A good way to save tax is by understanding the personal income tax deductions and credits that are available to you. To enhance the benefit of tax deductions and credits, consider these tips and reminders while you’re preparing your 2024 T1 income tax return (T1 return). Although there are several available tax deductions and credits, including provincial and territorial ones, this article will focus on some of the more common federal ones.

Revised tax credits for 2024

Volunteer firefighters’ and search and rescue volunteers’ tax credits: The amount used to calculate these two non-refundable tax credits has doubled from $3,000 to $6,000, resulting in a tax credit of $900 ($6,000 x 15%) for 2024 and later taxation years. If you’re eligible, you may claim one, but not both, credits. You may make a claim if you were a volunteer firefighter or a search and rescue volunteer in 2024 and you completed at least 200 hours of eligible volunteer firefighting service or eligible search and rescue volunteer service in the year.

The volunteer firefighters’ credit is claimed on Line 31220 of your T1 return, and the search and rescue volunteers’ credit is claimed on Line 31240.

Revised tax deduction

Disability supports deduction: The 2024 federal budget and corresponding draft legislation released in summer 2024 have proposed to expand the list of expenses eligible for this deduction.

The disability supports deduction offers individuals with physical or mental impairments a tax deduction for specific expenses incurred to help them work, carry on a business, attend school or engage in funded research. Eligible expenditures include costs for sign-language interpretation services, electronic speech synthesizers, voice recognition software, Braille printers and certain other specific expenses.

The proposed enhancement would expand the list of eligible expenses to include the cost of ergonomic work chairs, bed positioning devices, mobile computer carts and certain other expenses, as long as specified conditions are met, effective retroactively for 2024 and later taxation years.

On January 27, 2025, the CRA representatives confirmed it’s not administering the proposals at this time. If you incurred specific expenses in 2024 that would be eligible for the deduction as a result of the proposed enhancements, the CRA is advising taxpayers not to claim a deduction for these expenses in their 2024 T1 return but, instead, to wait until the legislation is enacted and then amend that return accordingly.

The disability supports deduction is calculated on Form T929, Disability supports deduction, and claimed on Line 21500 of the T1 return.

Other common tax deductions

Child care expenses: If you paid qualifying child care expenses for an eligible child to allow you to work or attend certain educational programs, you may be able to claim a deduction. The limits are generally $8,000 for each child under 7 years of age and $5,000 for each child between 7 and 16 years of age. A higher amount may be claimed for a child who has a disability. The total deduction claimed for all children cannot exceed two-thirds of your earned income. Earned income for this purpose includes employment income or net self-employment income (either alone or as an active partner) and certain financial assistance payments.

Interest expense: If you borrowed money for the purpose of making an income-earning investment, the interest expense incurred should be deductible.

Moving expenses: If you moved in 2024 to start a new job or a new business, or to attend university or college on a full-time basis, you may be able to claim expenses relating to the move.

Other common tax credits

In addition to various personal credits — such as the basic personal amount, spousal or common law amount or age amount — and the Canada employment credit, you may be able to claim certain other common federal tax credits, including the tax credits described below.

Tuition: A tuition tax credit is available to students for tuition and various ancillary fees. The tuition must generally be paid to an educational institution in Canada or a university outside Canada and the total course fee must be higher than $100.¹ Various examination fees paid to obtain a professional status or to be licensed or certified to practice a profession or trade in Canada may also be eligible. But the cost of supplies, equipment and student fees, as well as fees for admission examinations to begin study in a professional field are not deductible or creditable.

Many students do not earn enough income to fully use this credit. In this case, for federal purposes, you may transfer up to $5,000 of unused tuition amounts to certain close family members (such as a spouse, parent, or grandparent) who can use the amounts in their own T1 return (provincial amounts may vary). Any amounts not used by the student and not transferred may be carried forward and used — but only by the student — in any subsequent year.

Canada training credit: The Canada training credit is a refundable tax credit that is available to help you cover the cost of up to one-half of eligible tuition and fees associated with training. Eligible individuals² who have either employment or business income may accumulate $250 each year in a special notional account (your “training amount limit”) which can be used to cover the training costs. The amount of the credit that you are able to claim in a taxation year is equal to the lesser of one-half of the eligible tuition and fees paid in respect of the year and your balance in the notional account. For purposes of this credit, eligible tuition and fees must be levied by a Canadian educational institution. The Canada training credit claimed reduces the amount that would otherwise qualify as an eligible expense for the tuition tax credit.

The $250 amount may only be added to your notional account each year if you file your T1 return for the preceding tax year. Therefore, you must file your 2024 T1 return to have $250 added to your notional account for the 2025 taxation year.

Charitable donations: The federal tax credit for donations is available in two stages ― a low-rate 15% credit on the first $200 of donations and a high-rate (33% and/or 29%) credit on the remainder. Higher-income donors can claim a 33% tax credit on the portion of donations made from income that is subject to the 33% highest marginal tax rate.³ Otherwise, the 29% rate applies. The deadline for making charitable donations that qualify for the charitable donations tax credit in the 2024 taxation year has been extended to February 28, 2025, subject to certain conditions. See Filing your 2024 personal tax returns in this issue.

Disability: The disability tax credit (DTC) is available when an individual is certified by an appropriate medical practitioner as having a severe and prolonged mental or physical impairment — or a number of ailments — such that the individual’s ability to perform a basic activity of daily living is markedly restricted or would be without life-sustaining therapy. To claim the credit, the individual (or a representative) must file Form T2201, Disability Tax Credit Certificate, which must be signed by a specified medical practitioner. The federal DTC base amount for 2024 is $9,872, resulting in a non-refundable tax credit of $1,481. The provinces and territories provide a comparable credit.

For more information about the DTC, refer to the chapter “Tax assistance for long-term elder care” in Managing your Personal Taxes 2024-25.

Medical expenses: The claim for the medical expense tax credit is limited by an income threshold. In other words, the lower your net income, the more you may be able to claim in eligible medical expenses. For 2024, this credit may be claimed for eligible expenses in excess of the lower of $2,759 and 3% of net income. Because one spouse or common-law partner can claim medical expenses on behalf of the entire family, it generally makes sense to claim all expenses in the lower-income spouse’s T1 return (unless the lower-income spouse owes no tax), including the expenses of dependent children under the age of 18. You might be able to claim the medical expenses paid for other dependent relatives such as elderly parents or grandparents or children 18 years of age or older, but in this case, the income threshold for 2024 is equal to eligible expenses in excess of the lower of $2,759 and 3% of the dependent’s net income.

Conclusion

This tax season, make sure you claim all the tax deductions and credits you’re eligible for. There are several other tax deductions and credits you may claim if you are eligible to do so. The deductions and credits discussed above, and the ones listed below, are discussed in further detail in Managing your Personal Taxes 2024-25:

• Deductions for RRSP contributions
• Deductions for first-home savings account contributions
• Deductions and credits available to individuals carrying on an unincorporated business or professional practice
• Adoption expenses credit
• Digital news subscription tax credit
• Canada caregiver credit
• Labour-sponsored venture capital corporations tax credit
• Multigenerational home renovation tax credit

Krista Fox, Toronto, and Gael Melville, Vancouver

In a recent technical interpretation, the CRA confirmed that losses an individual may incur due to a personal scam such as a grandparent or phishing scam are generally not deductible.¹

What are personal scams?

Personal scams target individuals and use a variety of techniques to persuade them to part with their money.

For example, a grandparent scam typically involves a fraudster impersonating a senior citizen’s grandchild, claiming that the grandchild is in trouble and needs financial help. The fraudster then pressures the individual to immediately transfer money to the imposter.

In a phishing scam, a fraudster impersonates a trustworthy source such as a financial institution, persuading an individual to reveal personal or financial information that the fraudster then uses for their own financial gain.

How does the CRA treat losses resulting from personal scams?

The CRA was recently asked to provide its views on whether there was any tax recourse available for losses incurred in connection with a personal scam.

It stated that since the Income Tax Act (the Act) does not set out any specific treatment for victims of fraud, relief can only be found by applying the Act’s general provisions dealing with losses. The CRA also stated that, given the personal nature of the scams, a victim’s loss would not generally result in a loss from employment, business or property, or a business investment loss, since there is no source of income or income-earning activity related to that type of loss. Furthermore, the type of property that is lost is normally the victim’s personal funds.

Noting that an individual’s personal funds would generally be considered to be capital property, the CRA stated that the individual could incur a capital loss on the loss of such funds, although the loss-denial provisions of the Act may apply. One such loss-denial rule deems a loss on the disposition of a taxpayer’s personal-use property to be nil. Broadly speaking, personal-use property includes property the taxpayer owns and uses primarily for their own personal use or enjoyment.

The CRA noted that it has previously provided comments concerning the denial of capital losses of investors who were victims of fraud or scam on the basis that the lost cash was the victims’ personal-use property, referencing a prior CRA document as an example.²

The CRA acknowledged that it’s a question of fact whether a particular property is personal-use property. However, given the nature of a personal scam, in the CRA’s view, the personal-use property loss-denial rule would generally apply to deem the loss of the victim’s personal funds to be nil.

Lessons learned

Unfortunately, personal scams have become increasingly common, and the sophistication of new schemes is continually evolving. This CRA technical interpretation highlights how important it is for individuals to protect both themselves and vulnerable loved ones from fraudulent situations.