OTTAWA, ON, Feb. 19, 2025 /CNW/ - If you file information returns, such as the T3 (trust income), T4 (remuneration paid), T4A (pension and other income), or T5 (investment income), there are some important updates you need to be aware of.
Are you having trouble filing your information return or have questions about reporting capital gains (losses)?
Further to the tax tip issued in November on changes to the electronic filing of information returns, additional information is provided below to help filers navigate these changes. Given ongoing challenges faced by some filers, the Canada Revenue Agency (CRA) will grant relief in respect of late-filing penalties for information returns filed on or before March 7, 2025, for those information returns normally due on February 28, 2025.
Reporting capital gains (losses) on tax slips
The CRA will not be revising or altering the tax slips that were published in the fall of 2024 or their associated XML specifications and schemas as a result of the update on the Canada Revenue Agency's administration of the proposed capital gains taxation changes.
The instructions on the T3, T4, T4PS, T5, and T5013 slips currently reference the relevant lines on the T1 Schedule 3 or the T1 income tax and benefit return in respect of capital dispositions that occurred in Period 1 (dispositions that occurred prior to June 25, 2024) and Period 2 (dispositions that occurred on or after June 25, 2024).
While the CRA is reverting to the currently enacted capital gains inclusion rate of one-half, we are maintaining Period 1 and Period 2 reporting on the T1 and T3 schedules. Period 1 and Period 2 reporting is being maintained to ensure consistency with the tax slips that have already been published, those currently being issued to taxpayers and those filed with the CRA. As well, the proposed increase to the lifetime capital gains exemption applies starting with capital dispositions in period 2 of qualified farm or fishing property and qualified small business corporation shares.
Common Problems and Solutions
A "Confirmation of Receipt" email is sent by the CRA when a file has been received. This email does not necessarily indicate that the file was accepted. Filers must review the email to confirm whether the submitted information returns were accepted or rejected.
The following are common reasons a file is rejected:
- Rejected submissions due to missing mandatory tags in the XML: To avoid errors in your submission, you can validate your XML file by using an XML parser. This will allow you to verify the format and content of your XML file against the 2025 schema files provided by the CRA. You can find validating parsers on the Internet.
- Rejected submissions due to invalid account number: Program accounts (RP, RZ) must be in active status in order for the submission to be accepted for all return types. If you do not have an active program account, you can create one by visiting Business Registration Online.
- Rejected submissions due to incorrect Transmitter Account Number provided on the T619 Electronic Transmittal Record: you must ensure that the account number that was used to access the filing portal is the same account number entered in the T619.
My Business Account (MyBA)
To access file a return through MyBA, you are required to select a program account for the 15-character business number (BN15) (RP or RZ). Ensure the same BN15 is entered in the T619.
Represent a Client (RAC)
To access file a return through Represent a Client (RAC), your RAC Identifier (RepID) is required. Ensure the RepID is entered in the T619.
Web Access Code (WAC)
To access the filing applications using a WAC, only a BN15, Trust account, or non-resident (NR) account number is accepted. Ensure the same account number is entered in the T619. - T4 Box 45 and T4A Box 015 (dental benefits): When you prepare T4/T4A files for transmission, you must provide a code of 1 to 5 in box 45/015 to indicate the dental coverage of an employee. Despite having provided a dental coverage code, the paper T4/T4A slips generated in the Web Forms service will show a blank box 45/015. However, the code you provided is still transmitted to the CRA and to Health Canada.
- Calculate button on the summary page in MyBA and RAC (T4): If the calculate button is not working as expected, you can use the Web Forms application along with a WAC to file information returns.
Tax slip adjustments for trusts and certain other entities
As a result of the change to the effective date of the proposed capital gains inclusion rate increase, the information to be reported on certain tax slips – primarily the T3, T4PS and T5008 (book value) – needs to be recalculated to ensure taxpayers receive accurate information. The penalty relief in relation to the submission of these information returns, except for T3 slips (see below), to the CRA will be extended to March 17, 2025.
T3 information returns
The CRA announced that it will grant relief in respect of late-filing penalties and arrears interest until May 1, 2025, for impacted T3 Trust filers to provide additional time for taxpayers reporting capital dispositions to meet their tax filing obligations. This relief applies to both the filing of T3 information returns (slips) and the T3 income tax return.
Penalties after the expiration of the relief period
Although the CRA is providing relief from the application of the late filing penalty in the instances described above, a return will be considered late the day following the end of the relief period and will incur a late filing penalty based on its original due date. For example, if the relief period ends on March 7, 2025, for a return due by February 28, 2025, and a return is filed on March 8, 2025, the return will be considered to be 8 days late.
Electronic mailing list
This list provides filers of information returns (such as T4 and T5 returns) with email updates about important new information on our website. To subscribe to this mailing list, please visit the following page: Electronic mailing list - Electronic Filing of Information Returns.
Reminder: As your business changes, you may have questions or need guidance from the CRA. We can help. The Resources for Small and Medium businesses web page provides direct access to tax-related services and information for businesses, and subscribing to the Business Tax Information Newsletter will keep you up-to-date with the latest changes. The Liaison Officer Service is also available to small business owners and self-employed individuals who need help understanding their tax obligations.
Contacts:
Media Relations
Canada Revenue Agency
613-948-8366
[email protected]
Stay connected
- Follow the CRA on Facebook
- Follow the CRA on X @CanRevAgency
- Follow the CRA on LinkedIn
- Follow the CRA on Instagram
- Subscribe to a CRA electronic mailing list
- Add our RSS feeds to your feed reader
- Watch our tax-related videos on YouTube
- Listen to our Taxology podcast
SOURCE Canada Revenue Agency
Share this article