CRA Extends Deadline for Taxpayers with 2024 Capital Gains to File Tax Returns by an Extra Month

In 2024, individual taxpayers reporting capital gains or losses will have an extended filing deadline, with the Canada Revenue Agency (CRA) confirming that they can submit their returns by June 2 without incurring interest or late-filing penalties. The official deadline for filing individual T1 returns is typically April 30.

Extended Deadline for Trusts

Trusts that need to report a capital disposition on their 2024 T3 return will also benefit from extended filing relief. These trusts will have until May 1 to file without penalties, whereas the original filing deadline for T3 returns, based on a 2024 calendar year-end, is March 31.

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The CRA’s relief for trusts would also extend to 2025 trusts that report capital gains with a fiscal period ending between January 1 and January 31, 2025. These trusts must submit their T3 returns within 90 days of the year-end.

Impact of Existing Returns

According to CRA spokesperson Nina Ioussoupova, trusts that have already filed using the 50% capital gains inclusion rate (instead of the proposed two-thirds rate) will not be affected by the change.

This means trusts that have adhered to the existing guidelines won’t have to take any corrective actions.

Government Announcement: Postponing Capital Gains Rate Change

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The Liberal government announced in the 2024 federal budget that the proposed increase in the capital gains inclusion rate will be delayed until January 1, 2026, instead of taking effect on June 25, 2024.

Consequently, the CRA will revert to the current 50% inclusion rate for capital gains realized up until the new 2026 effective date.

This change came after the government’s decision to defer the capital gains rate increase from 50% to 66.7%, which was initially scheduled to take effect on June 25, 2024.

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It was also noted that individuals and certain trusts with annual gains of less than $250,000 would still be eligible for the lower rate.

CRA’s Approach to Taxpayers and Corporations

In response to these changes, the CRA is offering interest and penalty relief for individuals and trusts reporting capital dispositions.

This relief gives impacted taxpayers additional time to meet their filing obligations, although the CRA has not specified which taxpayers are eligible for this relief.

As for corporations, the CRA has clarified that they can continue using existing tax forms and software under the 50% capital gains inclusion rate.

However, for those corporations that already filed using the proposed two-thirds inclusion rate, the CRA will work to coordinate corrective reassessments to reverse the application of the higher rate.

Schedule 3 for Reporting Capital Gains

Earlier this week, the CRA issued the 2024 version of Schedule 3: Capital Gains or Losses (for all), which is necessary for reporting capital dispositions for the 2024 tax year.

The updated schedule introduces separate reporting for pre-June 25 and post-June 24 capital dispositions, but it applies a single 50% inclusion rate for both periods’ combined dispositions.

The 2024 Tax-Filing Season

The 2024 tax-filing season officially begins on February 24, with taxpayers able to file their returns online starting from that date.

Last year, the CRA reported receiving more than 33 million income tax and benefit returns, with 93% of them filed online, highlighting the growing preference for digital filing.

This tax season comes with important updates, including extended deadlines and relief measures for taxpayers. Keep these changes in mind to ensure you meet your filing requirements without facing penalties.

FAQs

What is the new capital gains inclusion rate for 2024?

The capital gains inclusion rate for 2024 will remain at 50% until January 1, 2026. The proposed increase to 66.7% is postponed.

What is the filing deadline for individual taxpayers in 2024?

Individual taxpayers reporting capital gains or losses have until June 2 to file without penalties, though the official deadline is April 30.

How does the delay in the capital gains rate change affect trusts?

Trusts will have until May 1, 2024, to file their T3 returns without penalties, and the interest and penalty relief will also apply to 2025 trusts with fiscal periods ending in January.