Tax Changes & Updates: What to Know for 2025-2026
Tax rules continue to evolve, and staying ahead of the changes can help you save money—and avoid surprises. Below is a simple breakdown of key updates that may affect your planning over the next couple of years.
SHORT‑TERM RENTAL DEDUCTIONS TIGHTENED
Running an Airbnb or other short‑term rental? Expenses are not deductible if your rental isn’t compliant with required provincial or municipal licenses or permits. If you’re only compliant for part of the year, deductions may be reduced pro‑rata.
RRSP CONTRIBUTION DEADLINE FOR 2025
You have until March 2, 2026 to make RRSP contributions for the 2025 tax year. Couples may benefit from using a spousal RRSP, especially when one partner has a higher income.
TFSA ROOM INCREASES IN 2026
Starting January 1, 2026, you can contribute an additional $7,000 to your TFSA. If you haven’t maxed out previous years, consider making catch‑up contributions.
HOME BUYERS’ PLAN (HBP) UPDATES
First‑time homebuyers can withdraw up to $60,000 from their RRSP under the HBP. Normally, repayments occur over 15 years—but for withdrawals made between 2022 and 2025, repayment doesn’t start until the fifth year after your first withdrawal.
FIRST HOME SAVINGS ACCOUNT (FHSA)
The FHSA continues to be a powerful tool for first‑time buyers:
Contributions are tax‑deductible
Withdrawals for a home purchase are tax‑free
Contribute up to $8,000 per year, to a $40,000 lifetime limit
Contributions made in 2025 (and unused 2024 room) can be deducted against 2025 income
ENHANCED GST/HST REBATE FOR FIRST‑TIME HOME BUYERS
A major change is coming for first‑time home buyers purchasing new homes:
Homes valued up to $1 million will qualify for a 100% GST rebate.
For homes priced between $1 million and $1.5 million, the rebate will gradually phase out.
The effective date has been moved up from May 27, 2025, to March 20, 2025—the day Prime Minister Mark Carney first announced the measure.
This update could make new home construction more affordable for many Canadians entering the housing market.
REGISTERED DISABILITY SAVINGS PLAN (RDSP)
Individuals under 60 who qualify for the disability tax credit can open an RDSP.
Key points:
Contributions (up to $200,000 lifetime) are not tax‑deductible
Grants, bonds, and investment growth are taxable when withdrawn
NEW: CANADA DISABILITY BENEFIT
If you qualify for the disability tax credit, you may now be eligible for the Canada Disability Benefit, offering up to $2,400 per year for individuals aged 18–64. Payments began in July 2025.
U.S. CITIZENS & RESIDENTS: DON’T FORGET U.S. FILING RULES
If you are a U.S. citizen, resident, green card holder, or even someone born in the U.S., you may have U.S. tax filing obligations. Information‑sharing agreements between the CRA and IRS mean cross‑border compliance is more closely monitored.
MISSED INCOME OR ELECTIONS? VOLUNTARY DISCLOSURE MAY HELP
If you’ve missed reporting income or filing required forms, the CRA’s Voluntary Disclosures Program may offer relief from penalties and some interest—though taxes owing must still be paid.
PERSONAL SERVICES BUSINESS (PSB) RISK
If you provide services through a corporation to only a few clients, especially clients who resemble an employer, the CRA may classify your corporation as a personal services business, which carries significant tax disadvantages. Budget 2025 announced a new enforcement initiative, beginning with the trucking industry. Professional advice is recommended to reduce risk (e.g., paying a salary to the incorporated worker).
INCOME REPORTING FOR ONLINE PLATFORM EARNINGS
If you earn money through digital platforms like Airbnb, VRBO, Uber, or similar services, take note: The CRA will begin receiving income information directly from these platforms for the 2025 calendar year, with reports due to the CRA by January 31, 2026.
This means:
Your platform‑based income will be visible to the CRA.
It’s more important than ever to ensure all income is accurately reported on your tax return.
Missing or under‑reported income could lead to reassessments or penalties.
RULES FOR NON‑RESIDENTS MAKING ASSIGNMENT SALES
If a non‑resident assigns their rights to purchase a property (an “assignment sale”), they must follow the same withholding and disclosure rules that apply to a direct sale of real estate. In other words:
Non‑residents cannot avoid tax obligations by assigning a property instead of selling it outright.
Proper reporting and withholding are required in both cases.
CRA WARNING: AVOID AGGRESSIVE INSURANCE‑BASED TAX SCHEMES
The CRA has issued a strong warning about complex tax schemes involving:
Critical illness insurance
Loans
Other insurance‑based financial arrangements
These schemes are often marketed as ways to reduce or avoid taxes—but the CRA has cautioned that:
Some of these insurance products do not meet the standards of legitimate insurance policies.
They may exist solely to support an improper tax strategy.
Taxpayers participating in such schemes could face reassessments, penalties, and interest.
The preceding information is for educational purposes only. As it is impossible to include all situations, circumstances and exceptions in a newsletter such as this, a further review should be done by a qualified professional.
No individual or organization involved in either the preparation or distribution of this letter accepts any contractual, tortious, or any other form of liability for its contents