Sohail Afzal, Chartered Professional Accountant and founder of GTA Accounting, Sohail helps businesses grow with expert tax strategies and financial planning.

Understanding the Employer Health Tax (EHT) in Ontario

Managing a business in Ontario means staying compliant with several provincial tax obligations, and one of the key ones is the Employer Health Tax (EHT). This tax applies to most employers who pay wages or salaries in Ontario and helps fund the province’s healthcare system.

Understanding how the Employer Health Tax Act works, who must pay, and how to file correctly is essential for avoiding penalties. This guide explains the EHT rates, thresholds, and filing process, and how GTA Accounting helps Ontario employers stay compliant.

What Is the Employer Health Tax?

The Employer Health Tax is a mandatory contribution that certain employers must pay based on the total remuneration paid to employees. Unlike CPP and EI, which are federal programs, EHT is specific to Ontario and regulated under the Employer Health Tax Act.

Who Is Required to Pay EHT in Ontario?

All employers who have a permanent establishment in Ontario and pay employees working in the province may be subject to EHT. This includes:

• Corporations
  
  
• Partnerships
  
  
• Sole proprietors
  
  
• Non-profit and charitable organizations (subject to specific exemptions)
  

Employers with payroll below the annual exemption threshold may not be required to pay EHT, but they must still register and file an annual return to claim the exemption.

Difference Between Employer Health Tax and Employee Health Deductions

A common misconception is that EHT is deducted from employees’ pay. In reality, EHT is paid by the employer, not the employee. It is separate from any employee health or insurance deductions made through payroll.

Employer Health Tax Act and Key Compliance Rules

Overview of the Employer Health Tax Act

The Employer Health Tax Act governs the calculation, filing, and payment of EHT in Ontario. It outlines the responsibilities of employers, available exemptions, and penalties for late filing or non-compliance. Understanding this legislation is critical for maintaining accurate payroll records and avoiding unnecessary penalties.

Employer Eligibility and Threshold Limits for 2025

For 2025, the EHT exemption threshold remains at $1 million for eligible employers. Businesses with Ontario payroll under this limit are exempt from paying EHT, but they must file to report eligibility.
Employers with payroll exceeding $1 million are required to pay EHT on the portion above the exemption threshold. Large employers with payroll over $5 million do not qualify for the exemption.

Exemptions and Special Rules for Small Businesses

Ontario provides relief for small employers by allowing them to claim the $1 million exemption. Associated corporations must share the exemption, meaning that if multiple related companies operate under the same control, they can only claim one combined exemption.

How to Calculate Employer Health Tax in Ontario

2025 EHT Rates and Calculation Formula

The EHT rate depends on the total Ontario payroll. For most employers, the rate ranges from 0.98% to 1.95%, depending on payroll size.
For example:

• Payroll up to $200,000: 0.98%
  
  
• Payroll between $400,000 – $400,000+: rates increase gradually
  
  
• Payroll above $400,000+: up to 1.95%
  

The formula for calculating EHT is:
EHT Payable = (Total Ontario Payroll − Exemption) × Applicable Rate

Payroll Components Included in EHT Assessment

EHT applies to all forms of remuneration, including:

• Salaries and wages
  
  
• Bonuses and commissions
  
  
• Vacation pay
  
  
• Stock options and taxable benefits
  
  
• Directors’ fees and allowances
  

Example: Calculating EHT for Ontario Employers

If an employer’s total Ontario payroll in 2025 is $1.6 million:

• Exemption: $1 million
  
  
• Taxable payroll: $600,000
  
  
• EHT at 1.95% = $11,700 payable
  

This example shows how easily EHT can affect mid-sized businesses and why proper calculation is important.

Filing and Payment Process for EHT

How to File Employer Health Tax in Ontario

Employers can file their Employer Health Tax returns through the Ontario e-Services portal.
The filing involves:

1. Registering for an Employer Health Tax account
   
   
2. Calculating the annual EHT liability
   
   
3. Submitting the EHT annual return online
   

Using the Employer Health Tax Ontario Login Portal

The Employer Health Tax Ontario login allows businesses to manage their filings, make payments, and check past submissions. It’s essential to use the correct Ontario Employer Health Tax login credentials linked to your business number (BN).

Filing Deadlines and Payment Methods in 2025

For most employers, the EHT annual return is due by March 15, 2026, for the 2025 tax year.
Employers with larger payrolls must also make monthly instalment payments. Missing a deadline may result in interest and penalty charges under the Employer Health Tax Act.

Common Filing Errors and Penalties

Common Mistakes Ontario Employers Make

Many Ontario employers make avoidable errors during EHT filing, such as:

• Misclassifying employee compensation
  
  
• Forgetting to register for EHT
  
  
• Failing to share the exemption among associated corporations
  
  
• Missing filing deadlines
  

Penalties for Late or Inaccurate EHT Filing

The Ministry of Finance may impose:

• Interest on unpaid balances
  
  
• Penalties for late filing
  
  
• Additional assessments during an EHT audit
  

Even small calculation errors can lead to unexpected costs, especially if your business is subject to an audit.

How to Correct an EHT Filing Error

If an employer discovers an error after filing, they can submit a voluntary disclosure or an amended return through the Ontario e-Services portal. Professional tax support ensures that corrections are handled properly without triggering penalties.

How Professional Tax Services Can Help

Benefits of Using a CPA for EHT Compliance

Hiring a CPA for Employer Health Tax compliance helps ensure accurate reporting and proper use of exemptions. A professional accountant can review your payroll structure, calculate EHT correctly, and file returns on time to prevent penalties.

How GTA Accounting Assists with EHT Filing and Payroll Compliance

At GTA Accounting, we help Ontario employers manage their payroll tax obligations efficiently. Our services include:

• Payroll tax compliance to handle calculations and filings
  
  
• Corporate tax filing to manage both federal and provincial obligations
  
  
• Tax planning and consulting to reduce unnecessary tax exposure
  
  
• Business accounting services to maintain organized records
  
  
• CRA audit representation to manage any reviews or inquiries
  

Our experienced team ensures that your Employer Health Tax filing aligns with current regulations and that you remain compliant year-round.

Final Thoughts

Staying Compliant with Ontario’s Employer Health Tax in 2025

The Employer Health Tax remains a key component of Ontario’s payroll obligations. Staying updated with annual changes, threshold adjustments, and filing requirements is essential for all employers, regardless of business size.

When to Seek Professional Assistance

If your business payroll exceeds the exemption threshold or if you operate multiple corporations, professional guidance from GTA Accounting can save you time and prevent compliance risks. Our team supports Ontario employers with complete payroll and tax management solutions.

Need help filing your Employer Health Tax (EHT) for 2025?
Contact GTA Accounting today for accurate filing, compliance support, and ongoing payroll tax management across Ontario.

Understanding Parking Permits in Toronto

Parking in a busy city can be a challenge, and Toronto is no exception. With limited street space and growing demand, the city has implemented a parking permit system to ensure fair access for residents, businesses, and visitors.

Why the City Issues Parking Permits

The main goal of parking permits is to regulate parking, reduce congestion, and make sure local residents have a fair chance to park near their homes. Without permits, high-traffic neighbourhoods could easily become overcrowded with vehicles that don’t belong to residents.

Who Needs a Parking Permit?

Anyone who regularly parks their vehicle on city streets or in designated residential areas often needs a parking permit. Tenants, homeowners, and in some cases, businesses must apply for these permits to comply with municipal regulations.

Types of Toronto Parking Permits

Toronto offers several types of permits depending on where and how a person parks their vehicle.

Residential Parking Permits

Residential permits are issued to people who live in neighbourhoods where parking is restricted. These permits allow them to park close to their homes, usually within specific zones.

Street Parking Permits

Street parking permits apply to areas where general street parking is controlled. These are commonly used in busy parts of the city where parking without a permit is limited or prohibited.

Temporary & Visitor Permits

For short-term needs, the city offers temporary and visitor permits. These are useful when guests visit or when a resident requires additional parking for a limited period.

Monthly and Commercial Parking Passes

Some areas allow for monthly or commercial parking passes, especially downtown or near business districts. These are more expensive but provide convenience for employees, companies, and residents who need reliable parking.

How to Apply for a Toronto Parking Permit

Applying for a permit is straightforward, but it requires attention to detail.

Application Process (Online & In-Person)

Residents can apply through the city’s official website using the online system, or they can visit the Toronto Parking Permit Office. The online process is usually quicker and allows applicants to upload required documents directly.

Required Documents and Eligibility

Applicants typically need proof of residency, vehicle ownership details, and in some cases, a driver’s licence. Renters may need to provide a copy of their lease agreement as well.

Permit Costs and Payment Options

The cost of permits varies based on the type and duration. Payments can usually be made online, by mail, or in person. Annual permits tend to be more cost-effective compared to monthly passes.

Renewal and Expiry of Parking Permits

Renewal Deadlines and Grace Periods

Most permits are valid for a set period, usually monthly or annually. Renewal reminders are often sent, but residents are responsible for ensuring they don’t miss deadlines.

Penalties for Expired Permits

Expired permits can result in fines, towing, or loss of permit privileges. Keeping permits up to date is essential for avoiding unnecessary expenses.

Parking Permits and Property Ownership

Parking permits often overlap with property-related expenses, especially for homeowners and landlords.

Connection Between Residential Permits and Toronto Property Tax

Homeowners often manage parking permits alongside their property tax payments. Although the two are separate, both fall under municipal responsibilities and can impact overall housing costs.

How a Real Estate Accountant Can Help Property Owners Track Expenses

A real estate accountant can help property owners properly record parking-related expenses, especially if the property is rented out. Proper accounting ensures accurate tax reporting and prevents missed deductions.

Parking Costs for Businesses and Tenants

Parking is not just a residential issue—many businesses must also manage these costs.

Monthly Permits for Commercial Use

Businesses in downtown Toronto often require monthly parking permits for employees. These can be costly but are necessary for staff convenience and business operations.

Expense Tracking with a Toronto Accountant

Working with an accountant in Toronto helps businesses manage parking costs, keep financial records organized, and plan budgets effectively. Parking expenses can be tracked as part of operational costs.

Tips for Managing Parking Expenses

Parking costs can add up quickly, so it’s important for individuals and businesses to manage them properly.

Budgeting for Residential and Business Parking

Residents should budget for annual permit renewals, while businesses need to account for multiple staff permits. Planning ahead helps avoid last-minute costs and penalties.

Including Permit Costs in Property and Business Accounts

Whether you’re a homeowner paying Toronto property tax or a tenant renting in the city, parking permits should be considered part of your regular expenses. Including them in accounts ensures financial clarity and better decision-making.

Final Thoughts on Toronto Parking Permits

Parking permits are a key part of living and working in Toronto. They provide fair access, reduce congestion, and ensure smoother traffic flow in residential and commercial areas.

Why Staying Compliant Matters

Staying compliant with parking regulations helps residents and businesses avoid fines, penalties, and unnecessary complications. It also contributes to a more organized city parking system.

When to Consult an Accountant in Toronto

Parking permits may seem minor, but over time, the costs add up. Consulting an accountant in Toronto or a real estate accountant can help property owners and businesses stay on top of these expenses while also managing related obligations like Toronto property tax. If you need professional guidance, GTA Accounting provides expert support with property-related finances, municipal tax compliance, and bookkeeping, ensuring you stay financially organised while meeting all city requirements.

What Is Toronto Property Tax?

Property tax is a local tax that homeowners pay to support municipal services such as schools, waste collection, public transit, and emergency services. The tax is calculated based on the assessed value of a property and the rate set by the city each year.

Every homeowner is responsible for paying it on time to avoid penalties or interest. Unlike income tax, which is collected by the federal and provincial governments, property tax goes directly to the municipality. This makes it an important part of owning a home or investment property in the city.

Why Use the Property Tax Lookup Tool?

The online property tax lookup tool provided by the City is a convenient way for homeowners to stay on top of their tax obligations. Instead of relying on paper bills or mailed notices, the tool gives easy access to up-to-date information.

Some of the main reasons to use it include:

• Checking if your latest payment has been processed
  
  
• Viewing past payment history for record-keeping
  
  
• Confirming upcoming due dates
  
  
• Ensuring your account is in good standing before selling or refinancing a property
  

For real estate investors who own multiple properties, the tool is especially useful for keeping track of several accounts in one place.

How to Access the City of Toronto Property Tax Lookup Online

The property tax lookup tool is simple to use. Homeowners can access it through the City’s official website by following these steps:

Step 1: Visit the property tax portal
Go to the City’s online property tax section. This is the official platform for all property tax information.

Step 2: Log in with property details
You will need either your property roll number, customer number, or account information. This information is usually found on your most recent property tax bill.

Step 3: Review your account
Once logged in, you can view your current balance, due dates, instalment options, and any past payments. The system is available 24/7, so you can check your property tax details whenever needed.

Information You Can Find in the Property Tax Lookup

The online lookup tool provides a wide range of details that help homeowners manage their finances more effectively. Information includes:

• Current year tax balance – How much you owe for the year, including instalments.
  
  
• Payment history – Records of all payments made to date.
  
  
• Due dates – Upcoming instalments to avoid late charges.
  
  
• Assessment details – The property’s assessed value as determined by the Municipal Property Assessment Corporation (MPAC).
  

Having this information in one place helps homeowners stay organised and avoid missing important deadlines.

Common Issues with Property Tax Lookup

While the system is designed to be user-friendly, there can be occasional issues. Some common challenges include:

• Login errors – Entering the wrong roll number or customer details can prevent access.
  
  
• Missing records – Payments may take a few days to show up in the system.
  
  
• Incorrect balances – If you recently made a payment, the balance may not reflect immediately.
  
  
• Technical glitches – Like any online tool, occasional maintenance or outages may occur.
  

If you face any of these problems, contacting the City’s property tax department is the best way to resolve the issue.

Property Tax Rates and Deadlines

Property tax is based on two main factors: the property’s assessed value and the tax rate set by the City each year. The assessed value comes from MPAC, while the municipal government determines the rate to meet budget requirements.

Taxes are usually due in instalments spread throughout the year. Late payments can result in interest charges, so it’s important to stay on top of deadlines. The lookup tool can be used to check instalment schedules and confirm when your next payment is due.

For homeowners with multiple properties or investment portfolios, keeping track of tax rates and deadlines is even more critical.

How a Real Estate Accountant Can Help with Property Taxes

Property taxes may seem straightforward, but they can quickly become complicated for homeowners with multiple properties, rental income, or changing assessments. A real estate accountant can help by:

• Reviewing property tax assessments for accuracy
  
  
• Advising on possible deductions for rental properties
  
  
• Helping track expenses related to investment properties
  
  
• Ensuring compliance with all municipal tax requirements
  

Professional support can save money in the long run, especially when dealing with appeals, assessments, or planning for property sales.

Do You Need an Accountant in Toronto for Property Tax Planning?

While many homeowners manage their own property tax payments, there are situations where professional help is highly beneficial. An accountant in Toronto can provide guidance on:

• Reducing tax liabilities through proper planning
  
  
• Avoiding penalties by staying compliant with payment deadlines
  
  
• Preparing financial records for property-related transactions
  
  
• Offering advice tailored to both homeowners and real estate investors
  

If you own multiple properties, run a rental business, or are planning to sell, an accountant’s expertise ensures you make informed financial decisions.

Final Thoughts on Property Tax Lookup

Using the property tax lookup tool is an effective way for homeowners to stay up to date with their financial responsibilities. It allows you to confirm balances, check deadlines, and keep accurate records.

At the same time, understanding how tax rates are calculated and when payments are due is essential for avoiding penalties. For more complex cases, such as investment properties or multiple holdings, working with a real estate accountant or a trusted accountant in Toronto can make property tax management much easier.

GTA Accounting provides professional services to homeowners and investors, helping them stay compliant and plan effectively for their property tax obligations.

Trade tensions, especially those involving tariffs, can send ripples through the economy—affecting everything from consumer prices to small business operations. While the headlines often focus on international politics, the real financial impact is felt in Canadian households and businesses. With another potential round of trade shocks looming, Canadians need to start thinking about how tariffs might impact their financial planning—especially when it comes to taxes.

Here’s what Canadians should understand—and do—before the next wave of tariffs hits.

What Are Tariffs and Why Do They Matter?

A tariff is essentially a tax on imported goods. When the Canadian government—or any government—imposes a tariff, it raises the cost of specific products coming into the country. This is often used as a tool in trade negotiations or to protect domestic industries.

For example, when the U.S. imposes tariffs on steel and aluminum from Canada, or when Canada retaliates by imposing tariffs on American dairy or manufactured goods, prices go up. These price increases can hurt Canadian consumers, squeeze small business margins, and indirectly affect taxes and deductions.

How Tariffs Affect You Financially

While most Canadians don’t directly engage in international trade, they’re still affected:

• Higher prices for everyday goods: Tariffs often result in increased retail prices.
  
• Reduced business profitability: Small businesses relying on imported materials or parts face cost increases.
  
• Changes in investment values: Trade uncertainty can hurt Canadian stocks, especially in sectors like manufacturing, agriculture, and retail.
  
• Supply chain disruptions: Higher tariffs make it harder for businesses to plan and budget, which may affect income and tax liability.
  

These changes can have long-term effects on personal finances and business tax strategies.

Tax Planning Amid Tariff Volatility

When trade instability is in the picture, Canadians must take proactive tax planning measures to reduce their risk and improve financial efficiency. Here's how:

Track Business Expenses Closely

If you’re a business owner importing goods that may become subject to tariffs, ensure you’re tracking increased costs for potential deductions. Work with a professional accountant to categorize these appropriately for CRA purposes. This is especially critical for manufacturing, retail, and e-commerce businesses.

Review Your Supply Chain and Inventory Strategy

Tariffs can lead to delays and higher inventory costs. Evaluate if it makes sense to order in bulk before tariffs take effect—or find domestic alternatives. Either strategy has tax implications, including:

• Inventory accounting adjustments
  
• Changes in input tax credits (ITCs) for GST/HST
  
• Potential write-offs for unused or obsolete stock
  

Consider Capital Cost Allowance (CCA) Acceleration

If you're planning to upgrade equipment to shift toward domestic suppliers or change operations due to tariff impacts, now may be the time to leverage CCA. Accelerated deductions can help offset higher costs brought on by new supply chain strategies.

Adjust Estimated Tax Payments

Increased costs and lower profitability may mean you’re overpaying quarterly tax instalments. Talk to a tax professional about adjusting your CRA instalment amounts. Conversely, if your costs are going up but revenues remain stable, you may owe more. Being proactive here helps avoid surprise tax bills.

Take Advantage of Available Tax Credits

The Canadian government offers tax incentives that may soften the blow of trade volatility:

• Scientific Research and Experimental Development (SR&ED) for companies developing new processes or improving efficiency.
  
• Export Development Canada (EDC) support for businesses looking to expand globally despite tariffs.
  
• Apprenticeship Job Creation Tax Credit (AJCTC) if your company hires and trains workers to replace external production.
  

These credits can help make up for reduced margins caused by tariff shocks.

Stay Informed on Policy Changes

The federal government often adjusts tax policies in response to trade shocks. Stay up to date with CRA announcements and budget releases, especially for:

• Changes in tariffs or duties
  
• New tax credits or subsidies for impacted sectors
  
• Updates to income-splitting or payroll policies
  

Timely knowledge is power—and may lead to better financial outcomes.

Consult an Experienced Tax Professional

Trade disruptions create tax complications. Whether you’re a business owner or an individual investor, now is the time to have a professional review your tax strategy. A licensed accountant can help you:

• Mitigate risk
  
• Maximize eligible deductions
  
• Plan for the year ahead, not just the past
  

At GTA Accounting, we help Canadians adapt to changing economic conditions, including trade-related disruptions.

What About Individuals? Tariffs Affect You Too

Even if you don’t run a business, you’re not immune:

• Cost-of-living increases may change your budgeting and savings strategy.
  
• Fluctuating RRSP and TFSA investment values could impact your retirement planning.
  
• Higher housing material costs may affect renovation tax credits or claims under the Home Accessibility Tax Credit.
  

Individual taxpayers should consider reviewing their personal tax planning, especially if they’re making large purchases, renovating, or investing in volatile sectors.

Tariffs, Inflation, and the CRA

Tariffs often lead to inflation, which can have hidden tax implications. For example:

• Bracket creep: Your income may not rise significantly, but inflation pushes you into a higher tax bracket.
  
• Reduced real value of credits: Some tax credits don't adjust fully with inflation, reducing their impact.
  

With Canada already battling inflation, another round of tariffs could worsen these effects. Tax planning is your best defence.

Final Thoughts: Be Proactive, Not Reactive

Tariffs and trade wars may seem out of your control—but their financial impact doesn’t have to be. Whether you’re a business owner, investor, or salaried worker, now is the time to get your tax planning in order.

If you’re concerned about how future tariffs could affect your finances, connect with our team at GTA Accounting. We offer comprehensive tax planning and consulting services tailored to economic uncertainty. The earlier you act, the more control you have over your financial outcomes.

As of mid-2025, Ontario small business owners face stricter enforcement of HST (Harmonised Sales Tax) compliance. The Canada Revenue Agency (CRA) has updated its penalty framework, introducing tougher consequences for late HST filings, incorrect HST returns, and non-compliance. Understanding these new rules is crucial if you want to avoid steep fines and interest charges.

In this article, we’ll walk through what the new HST penalties mean for your Ontario-based small business, what steps you can take to stay compliant, and how a professional accounting firm like GTA Accounting can help you manage your obligations under Canada’s tax laws.

What Is the HST?

HST, or Harmonised Sales Tax, is a combination of the federal GST (Goods and Services Tax) and the provincial PST (Provincial Sales Tax). In Ontario, the HST rate is 13%. If your business makes more than $30,000 in annual revenue, you’re required to register for HST, collect it on taxable goods and services, and file returns to the CRA regularly.

What’s Changing in 2025?

Starting in July 2025, the CRA is:

• Increasing penalties for repeated late filings of HST returns.
  
• Introducing stricter monitoring of HST input tax credit claims.
  
• Applying interest charges more aggressively for underreported tax.
  
• Auditing more e-commerce and service-based businesses operating in Ontario.
  

This is part of the CRA’s larger push to modernise tax enforcement and reduce the tax gap in Canada.

Key Penalties Ontario Small Business Owners Must Know

Here are some of the new or updated HST-related penalties that Ontario businesses should be aware of:

1. Late Filing Penalty

Failing to file your HST return by the due date may result in:

• A penalty of 1% of the outstanding HST owed, plus
  
• An additional 0.25% per month (up to 12 months).
  

This means that if your HST return is filed 4 months late, you could face a penalty of 2% of the total unpaid HST.

2. Failure to Remit Collected HST

If you collect HST from your customers and fail to remit it:

• You’ll be subject to interest on unpaid amounts starting the day after the due date.
  
• The CRA may consider this tax evasion in repeated or severe cases.
  

3. Misreporting or Underreporting

Filing incorrect numbers—whether accidental or deliberate—can lead to:

• A 10% penalty on the difference between the reported and correct amount.
  
• If misreporting is repeated, penalties can go up to 20%.
  

What Types of Businesses Are Most at Risk?

The CRA is placing more attention on:

• Online retailers operating in or shipping to Ontario.
  
• Freelancers and consultants are not properly tracking input tax credits.
  
• Restaurants and retail stores that underreport cash sales.
  
• Construction companies are claiming HST rebates inaccurately.
  

Common Mistakes That Lead to HST Penalties

To stay compliant, you must avoid common mistakes like:

• Filing your HST return late.
  
• Charging the wrong HST rate.
  
• Not registering for HST after passing the $30,00
  
• Claiming input tax credits on ineligible expenses.
  
• Using estimates rather than actual figures.
  

These mistakes not only lead to HST penalties, but they can also trigger audits and even freeze your CRA account if left unresolved.

How to Protect Your Business

Here are steps you can take to avoid running into trouble with the CRA:

File on Time

Use accounting software or a professional tax service to ensure your HST returns are submitted before the deadline.

Keep Clear Records

Retain all receipts, invoices, and documentation related to HST you collect and remit.

Understand Input Tax Credits

Ensure you're only claiming ITCs (Input Tax Credits) on eligible business expenses. Personal expenses or capital expenditures may not qualify.

Get Professional Help

Work with an accounting firm in Ontario like GTA Accounting, which understands the latest CRA regulations and offers HST compliance services tailored to small business owners.

What If You've Made a Mistake?

If you suspect you’ve made a mistake on a past HST filing:

• You can amend your return through the CRA My Business Account.
  
• Or, submit a voluntary disclosure before being contacted by the CRA, which may reduce penalties.
  

Delaying action may result in a CRA audit or legal action—so acting early is always the safer route.

What Sets GTA Accounting Apart?

At GTA Accounting, we help small businesses in Ontario stay on top of:

• HST registration and filing
  
• Payroll tax compliance
  
• Corporate tax planning
  
• CRA audit support
  

We stay up to date on all federal and provincial tax law changes—including new HST penalties—to protect your business from unnecessary financial risk.

Whether you run a retail store, e-commerce site, consultancy, or freelance business, our accountants in Toronto, Mississauga, Brampton, and across the GTA can help.

Final Thoughts

The new HST penalties in Ontario are a wake-up call for small business owners to take compliance seriously. Filing late or making errors may now cost significantly more than in previous years.

With help from GTA Accounting, you can:

• Stay compliant,
  
• Avoid penalties, and
  
• Focus on running and growing your business.
  

If you're unsure about your current HST setup or have received a CRA notice, now is the time to get expert support. Our tax professionals are ready to help you handle the changes and plan for future success.

Need help with HST filings or CRA correspondence?
Contact GTA Accounting today — serving small businesses across Ontario with reliable and compliant tax services.

Starting June 25, 2024, Canada implemented a significant change to how capital gains are taxed. The capital gains inclusion rate—the portion of capital gains that is taxable—was increased from 50% to 66.67% for individuals with capital gains over $250,000 annually. For corporations and most trusts, the new rate applies to all gains.

For Canadian investors, this change has real financial implications. Whether you hold stocks, real estate, or a small business, understanding how this inclusion rate hike affects you is crucial for future planning.

What Is the Capital Gains Inclusion Rate?

Capital gains occur when you sell an asset—such as shares, real estate, or business interests—for more than what you paid. The inclusion rate determines how much of that gain is subject to tax.

Until June 24, 2024, only 50% of capital gains were taxable in Canada. With the change:

• Individuals: Still pay tax on 50% of their annual gains up to $250,000, but for gains exceeding that, the taxable portion jumps to 66.67%.
  
• Corporations and most trusts: Pay tax on 66.67% of all capital gains, regardless of amount.

Why Was This Change Introduced?

The federal government introduced this change as part of its 2024 Budget to help fund healthcare and housing programs. Officials claim the new policy ensures “fairness,” by targeting wealthier Canadians who make significant profits from capital investments.

Who Is Most Affected?

The capital gains inclusion rate hike primarily affects:

• High-net-worth individuals selling investments or real estate with significant gains
  
• Business owners are planning to exit or sell their businesses.
  
• Real estate investors with large portfolios
  
• Corporations with significant investment income

Examples: How the Change Impacts Tax Owed

Let’s break this down with a simple example:

Before the Change:

You sell shares for a $300,000 gain.
Taxable portion = 50% of $300,000 = $150,000
If you're in a 40% marginal tax bracket, tax = $60,000

After the Change:

First $250,000 still at 50% = $125,000 taxable
Remaining $50,000 at 66.67% = $33,335 taxable
Total taxable = $158,335
Tax at 40% = $63,334
You pay $3,334 more for the same gain.

For larger gains, the difference becomes much bigger.

What About Real Estate?

Principal residences are still exempt, but:

• Cottages, vacation homes, or rental properties fall under this new rule
  
• Flipping a property? Your gain might be taxed as business income, which can be higher than capital gains.
  

What This Means for Your Investment Strategy

This inclusion rate hike makes tax planning more important than ever.

Consider These Adjustments:

1. Use Capital Losses
   Offset gains by selling underperforming assets to trigger capital losses.
   
2. Split Gains Across Tax Years
   If possible, split your sales to stay under the $250,000 limit annually.
   
3. Review Corporate Structures
   Business owners and investors using holding corporations should revisit their structure with a professional to reduce exposure.
   
4. Reassess Real Estate Holdings
   If you hold properties in hot markets, consider timing and structuring future sales wisely.
   
5. Utilise the Lifetime Capital Gains Exemption (LCGE)
   Eligible small business owners may still claim the LCGE—currently $1,016,836 in 2024—on qualifying gains.
   

How to Prepare for the Inclusion Rate Increase

Even though the change has already taken effect, the impact will show up on 2024 and 2025 tax returns, depending on when gains were realised.

Here’s what you should do now:

1. Talk to a Tax Advisor

Don’t assume your past strategy still works. Every investor should get a personalised assessment of their tax exposure.

2. Rebalance Your Portfolio

Focus on tax-efficient investments, like dividend-paying stocks or assets with deferred gains.

3. Reconsider Business Exit Timing

If you’re selling your business or commercial property, proper structuring can significantly reduce tax payable.

Common Misconceptions

Let’s clear up some confusion:

• My tax rate went up
  False. Your marginal tax rate is unchanged; it’s the taxable portion of your gain that increased.
  
• This affects everyone equally.
  False. Lower- to middle-income investors are unlikely to hit the $250,000 threshold, so they’ll see no difference.

Why Tax Planning Matters Now

If you live in Ontario, British Columbia, or elsewhere in Canada, your combined federal and provincial tax rates can reach 50% or more. With more of your gains now being taxable, your effective tax cost on investments has gone up.

For example, a high-income investor in Ontario now faces:

• An effective tax rate of over 33% on capital gains above $250,000
  
• This makes professional tax planning essential.
  

How GTA Accounting Can Help

At GTA Accounting, we’ve helped thousands of clients across Canada—especially in Toronto, Mississauga, Vancouver, and Calgary—understand how the latest tax laws affect their wealth.

We offer:

• Capital gains tax planning
  
• Real estate tax optimisation
  
• Small business tax strategies
  
• Corporate tax filings
  
• Lifetime Capital Gains Exemption planning

In Summary

The 2025 capital gains inclusion rate hike is a significant shift for Canadian investors, particularly those with large investment gains or real estate portfolios. While it may not affect every taxpayer, those it does affect could see thousands or even millions in additional taxes over time.

Now is the time to review your strategy, minimise your exposure, and make sure your tax plan aligns with your investment goals.

Need help navigating these changes? Contact GTA Accounting today for tailored tax advice and peace of mind.