Capital Gains Increase Delay: CRA Offers Clarification on Interest Relief for Businesses

It’s been a busy—and confusing—start to the year for Canadian taxpayers and tax professionals. Ever since the federal government announced plans to increase the capital gains inclusion rate, confusion around implementation has prompted multiple updates and relief measures from the CRA.

With the upcoming federal election on April 28, 2025, the Liberals and Conservatives have now pledged to cancel the proposed capital gains inclusion rate increase—so we’ve come full circle almost a year later after the change was first announced. Most recently, the CRA has clarified how its latest interest relief measures apply to businesses, offering some much-needed clarity amidst ongoing uncertainty.

Here’s a quick recap of the saga since the initial announcement:

• Delay and relief measures: To ease confusion, the government delayed the implementation date of the capital gains inclusion rate increase to January 1, 2026. In response, on January 31, 2025 the CRA announced interim penalty and interest relief for impacted T1 and T3 filers, providing more time to meet filing obligations tied to capital gains.
• Further clarification: On February 13, 2025, the CRA confirmed that this relief was specifically intended to support taxpayers dealing with capital gains reporting. However, some ambiguities remained—such as whether disposition of capital property (resulting in a gain or loss) are qualified, or whether spouses of impacted T1 filers or forms like the T1135 are also covered.
• Slip filing relief: On February 19, 2025, CRA announced it would waive late-filing penalties for certain information slips—including T4, T4A, T5, T4PS, T5008, and T3 slips for impacted trusts—if filed by newly extended deadlines in March or May 2025.
• Corporate relief withdrawn: The CRA also confirmed that earlier relief offered to corporations with T2 returns due on or before March 3, 2025—which was intended to give time for software updates—was no longer needed, and thus, rescinded.
• Newest interest relief (April 2025): Most recently, the CRA introduced new interest relief (not penalty relief) for T2 and GST/HST payments and balances due between April 2 and June 30, 2025, in recognition of ongoing financial pressures.
• T1 forms and elections (April 2025): The CRA has also indicated that the relief for impacted T1 Individual filers extends to forms and elections normally included with T1 returns, including Form T1135 Foreign Income Verification Statement

What does this mean for you and your business?

T2 Corporation Income Tax

Earlier this year, CRA rescinded previously announced penalty and interest relief specifically related to the originally planned capital gains inclusion rate change, affecting corporations with filing deadlines on or before March 3, 2025. However, recognizing ongoing financial pressures, CRA has now introduced new relief measures specifically providing:

• Interest relief on T2 Corporation Income Tax payments due between April 2, 2025 and June 30, 2025, both on instalments and arrears; and,
• Interest reliefon existing T2 balances. during this same period.

Important note:
This latest relief applies only to interest charges and does not currently include penalty relief.

GST/HST Payments

The CRA has also introduced targeted relief for GST/HST obligations within the same April–June 2025 timeframe:

• Interest relief on GST/HST payments due between April 2, 2025 and June 30, 2025, both instalments and arrears; and,
• Interest relief on existing GST/HST balances during this same period.

Important note:
Similar to the corporation income tax measures, this relief is specific to interest charges only and currently does not include penalty relief.

Reminder: Relief measures for individuals and trusts (T1 and T3 filers)

For clarity, here’s a reminder of the current relief deadlines for individuals and trusts affected by the capital gains changes:

T1 individual taxpayers

• Original deadline: April 30, 2025 (June 15, 2025 if the taxpayer or their spouse are self-employed in the year).
• Extended relief deadline: June 2, 2025 (no penalties or interest) for impacted T1 Individual filers
  • Per CPA Canada: “Impacted T1 Individual Filers” includes individuals that are reporting any capital disposition in 2024. This relief extends to any forms and/or elections that are normally included with T1 returns, including the Form T1135 Foreign Income Verification Statement.

Per CPA Canada and its correspondence with the CRA:

For most individuals, the deadline to file their tax return is April 30, 2025, and any balance owing must also be paid by that date. The Agency will provide relief from late-filing penalties and interest until June 2, 2025, for individuals and until May 1, 2025, for trusts, giving taxpayers reporting capital gains additional time to meet their filing obligations. This applies to individuals that are reporting any capital disposition on Schedule 3 of the T1 income tax and benefit return for the 2024 tax year. This relief extends to any forms and/elections that are normally included with T1 returns, including Form T1135 Foreign Income Verification Statement.

Impacted T3 trust filers (trusts and estates)

• Original deadline: Typically, 90 days after year-end (e.g., March 31 for December 31 year-ends).
• Extended relief deadline: May 1, 2025 (no penalties or interest) for impacted T3 Trust filers
  • Per CPA Canada: “Impacted T3 Trust Filers” generally includes trusts reporting dispositions of capital property for tax years ending between June 24, 2024 and January 31, 2025.

CPA Canada sought further clarification and the CRA responded that impacted T3 Trust filers would also include 2025 T3 tax returns and their T3 slips where there is a disposition to be reported and the return has a fiscal period ending between January 1, 2025 and January 31, 2025.

So, it appears that if a Trustee disposed of Trust capital property (whether it sold it in March or July 2024) and it will report the disposition on its December 31, 2024 T3 return, then it may file the T3 return and T3 slips up to May 1, 2025 (extended from March 31, 2025) without penalty. Similarly, if the executor of an estate sold capital property at any time in its fiscal period that ends, on say, September 30, 2024, then it may file the T3 return up to May 1, 2025 (extended from December 29, 2024) without penalty.

With ongoing developments and CRA clarifications outstanding and changes still possible, staying informed is essential. DMCL continues to closely monitor these updates to ensure you have accurate, timely guidance.

For personalized advice on how these relief measures specifically impact you or your business, please contact your DMCL advisor. They’re here to help you confidently navigate these evolving tax obligations.

See CPA Canada’s recent coverage of these developments for more information.