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Financing the political process – the political contribution tax credit (May 2025)

To win elections, politicians need votes. And to run the election campaigns needed to garner those votes, they need an organization, volunteers, and money – a lot of money. To wage the federal election held last month, the major political parties needed to raise and spend millions of dollars. Their task of raising that money was undoubtedly made somewhat easier by the fact that Canadian taxpayers who donate money to political parties or candidates can obtain some tax benefit from doing so.

Individuals who donate money to the political party or candidate of their choice may or may not be happy with the outcome of the election, but no matter which registered party or candidate they donated to, it will be possible for them to claim a federal tax credit for those donations when they file their returns for 2025 next spring.

The credit provided under the Income Tax Act is available with respect to funds contributed to either a registered political party or to candidates running in a federal election. Contributions can be made at any time, not just during an election campaign, as long as the donation is received by an official candidate or by a registered federal political party or association.

While the parties which currently hold seats in the House of Commons are, of course, the most well known, there are in fact 16 political parties currently registered and in good standing with Elections Canada. They are as follows, in alphabetical order:

Contributions to any one of these registered parties, within prescribed limits, would qualify for the federal political contribution tax credit. Where a qualifying contribution is made, an official receipt must be issued in order for the contributor to claim that tax credit.

The federal political contribution tax credit is calculated as a percentage of donations given, with the credit percentage decreasing as contribution amounts increase. The credit percentages allowed for different contribution levels are as follows:

*Contribution amount*	*Allowable tax credit*
$0.01 to $400.00	75% of the contribution
$400.01 to $750.00	$300 plus 50% of the contribution over $400
$750.01 and over	$475 plus 33.33% of the contribution over $750

The maximum credit claimable in any taxation year by a single taxpayer is $650. Once the arithmetic is worked out, it becomes clear that the maximum credit obtainable is reached once contribution levels reach $1,275.

Contribution amount Allowable tax credit

$400 times 75% = $300.

$350 times 50% = $175.

$525 times 33.33% = $175.

$1,275 $650.

Where donations exceed $1,275 in any one taxation year, no tax credit can be claimed on any “excess” donation. As well, there is no provision which allows the taxpayer to carry over any “excess” contributions to a subsequent taxation year, meaning that no credit will ever be obtainable with respect to those “excess” donations.

Many Canadians who are committed to a particular political party or candidate volunteer their time during a nomination or election campaign – canvassing for the candidate, putting up election signs, or telephoning voters to encourage them to vote for the candidate. However, in such cases, the work must be its own reward, as no income tax receipts can be issued for most such non-monetary contributions and consequently no credit can be claimed for the value of any non-monetary contribution (including volunteer hours) donated.

The credit for qualifying donations made is calculated and claimed on the tax return for the year in which the contribution was made. The amount of the credit is calculated (according to the formula outlined above) on the Federal Worksheet and the amount of the actual credit amount entered on line 41000 of page 7 of the federal tax return. By the time the 2025 return is filed, of course, the election will long since have been concluded, the newly elected government will be in place in Ottawa, and the taxpayer who contributed will be in a position to assess whether it was, in fact, money well spent.

The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.

When you don’t agree with the CRA – disputing your Notice of Assessment (May 2025)

While no two tax returns filed with the Canada Revenue Agency are identical, all such tax returns have one thing in common. Once those tax returns are filed, the CRA will review the income amounts reported and the tax deduction and credit claims made, and issue a Notice of Assessment (NOA) outlining its conclusions with respect to the taxpayer’s tax situation for the year.

When all goes well, the figures listed and the tax result obtained on that NOA will agree with the numbers submitted by the taxpayer on their return. In most cases, the filing of the return will result in a tax refund owed to the taxpayer, while for others there will be a tax balance owed.

Matters get more complicated where the CRA is not in agreement with the information provided or the claims made by the taxpayer in their return and, especially, where the CRA finds that additional tax must be paid by that taxpayer. When that happens, the taxpayer has to decide whether to dispute the decisions made by the CRA as outlined in the NOA for the year.

There are a lot of reasons why the CRA may disagree with the taxpayer, and in many cases disputing the CRA’s findings really doesn’t make sense. While the use of tax return preparation software has greatly reduced the number of clerical or arithmetical errors made on a return, and minimized the chances of the taxpayer claiming a tax credit to which they are not entitled, those errors can still occur. And, where that has happened and the CRA correctly identifies the error, there’s nothing to be gained by disputing their conclusions.

In many other cases, however, the taxpayer may genuinely feel that the conclusions reached by the CRA are simply incorrect. Our tax system is very complex, and the rules governing the circumstances in which a particular deduction or credit can be claimed are very detailed. In many cases, there can be a genuine question about whether, for instance, a business expense or an out-of-pocket medical cost can be claimed for tax purposes. Where the taxpayer believes that a claim made should have been allowed but was not, the next step to take is to find out why.

To do so, it’s best to contact the Agency directly for an explanation of their decision. Taxpayers can call the Individual Income Enquires line at 1-800-959 8281 where client service agents who have access to individual tax files can provide additional information on the Agency’s decision. Taxpayers who call that line should ensure that they have a copy of the NOA and/or their tax return for the year, as they will be required to provide information from that return (at a minimum, their name, social insurance number, address, and probably one or more figures from the return) before any confidential tax information can be discussed or disclosed.

Where the matter can’t be resolved to the taxpayer’s satisfaction by talking to the CRA, it’s then time to consider filing a formal dispute. The easiest way by far of doing so is to file the dispute online, through the CRA’s My Account service, but to do so, the taxpayer must already be registered for that service.

At one time, registering for My Account was a fairly lengthy process, involving a wait for a security code to be sent by regular mail, but recent changes to CRA procedures have streamlined that process. Essentially, a taxpayer who wants to register for My Account needs to submit a photograph and an accepted identification document (for instance, a Canadian passport or driver’s licence) online to verify their identity. Detailed information on the available options to become registered for My Account and the procedures to be followed can be found on the CRA website at https://www.canada.ca/en/revenue-agency/services/e-services/cra-login-services/register-cra-sign-in-services.html.

Taxpayers who are using My Account to file a Notice of Objection can do so by logging in online at https://www.canada.ca/en/revenue-agency/services/e-services/e-services-individuals/account-individuals.html. Once logged in, it’s necessary to click on the “File a formal dispute” from the listing on the left-hand side of the page. The taxpayer then provides information with respect to the assessment being disputed and the reasons why the assessment is being disputed and submits those reasons by clicking on the Submit button at the bottom of the "File a formal dispute” page. Taxpayers who are disputing their tax assessment through My Account can also scan and send supporting documents relating to that dispute to the Agency.

While filing a dispute through My Account is certainly faster than mailing (or faxing) hard copy of the Notice of Objection, not all taxpayers want to use that option. Taxpayers who choose instead to file their objection using hard copy of a Notice of Objection form can find the most current version of the CRA’s standardized T400A Objection on the Agency’s website at T400A Notice of Objection - Income Tax Act - Canada.ca.

Taxpayers aren’t obligated to use the CRA’s official Notice of Objection form – any communication which makes it clear that the taxpayer is objecting to their Notice of Assessment will do. Nonetheless, there’s no reason not to use the standardized form, and there are benefits to doing so. Using the T400A form will make it clear to the CRA that a formal objection is being filed, will present the necessary information in a format with which the Agency is familiar, and will also mean that no required information is inadvertently omitted. It’s also helpful to include a copy of the Notice of Assessment which is being disputed. Taxpayers should also consider ensuring proof of both delivery and time of delivery by sending the form or letter to the Appeals Intake Centre in a way which provides for tracking and proof of delivery.

There is a single Appeals Intake Centre, and the mailing address for that Centre can be found on the CRA’s Notice of Objection form. A Notice of Objection can also be faxed to the Appeals Intake Centre, and the fax numbers for that Centre are available on the CRA website at File an objection – Income tax – Canada.ca. Finally, taxpayers can contact the CRA at its objection enquires phone line in order to get information about the status of one’s appeal. The toll-free telephone number for calls from within Canada to that line is 1-800-959-5513. Taxpayers who filed their objection through My Account can find out the status of their appeal by checking the “Progress Tracker” feature on that service.

Filing a Notice of Objection, by any method, formally advises the CRA that the taxpayer is disputing the Agency’s determination of their tax liability for the taxation year in question. Not incidentally, the filing of an Objection also brings to a halt most efforts undertaken by the CRA to collect taxes which it considers owing for the taxation year under dispute (although, if the taxpayer is eventually found to owe an amount in dispute, interest on that amount will have accumulated in the interim). Where the taxpayer files an Objection, the CRA’s collection efforts are, in most cases, suspended until 90 days after the date the CRA’s decision on that Objection is sent to the taxpayer.

There is a time limit by which any Objection must be filed, albeit a reasonably generous one. Individual taxpayers must file an Objection by the later of 90 days from the mailing date of the Notice of Assessment (the date found at the top of page 1) or one year from the due date of the return which is being disputed. So, for tax returns for the 2024 tax year, the one-year deadline (which is usually, but not always, the later of those two dates) would be April 30, 2026 (or June 16, 2026 for self-employed taxpayers and their spouses). As with most things related to taxes, it’s best not to put it off. At the very least, if the taxpayer is ultimately found to owe some or all of the taxes assessed by the CRA, interest will have accrued on those taxes for the entire period since the filing due date and, if the filing of the Objection is delayed, the CRA may well have already commenced its collection efforts.

In the course of making its decision, the Agency may or may not contact the taxpayer for further discussions of the issues in dispute. Should the taxpayer be contacted, they may be asked to provide representations outlining their position in writing or at a meeting. Through such representations and meetings, it may be possible for the taxpayer and the CRA to come to an agreement on the taxpayer’s tax liability. In either case, the CRA will either confirm its original assessment or change it. If the original assessment is changed, the CRA will issue a Notice of Reassessment outlining the changes. If the taxpayer continues to disagree with the CRA’s position, the next step is an appeal to the Tax Court of Canada. Once matters reach this point, it’s generally a good idea to consult a lawyer before deciding to file an appeal.

Detailed information on the objection process is available on the CRA website at File an objection – Income tax – Canada.ca. The Agency also publishes a useful pamphlet entitled Resolving Your Dispute: Objection and Appeal Rights under the Income Tax Act, and the most recent release of that publication can be found on the CRA website at P148 Resolving your dispute: Objection rights under the Income Tax Act - Canada.ca.

When keeping up with mortgage payments becomes a problem – where (and where not) to turn for help (May 2025)

At first glance, it might seem that the financial pressures experienced by Canadian families would have eased over the last year or so. The spike in interest rates which started in early 2022 has abated, with the Bank of Canada cutting its benchmark rate several times since mid-2023. As well, the rate of inflation, which had reached 6.8% in late 2022, began moderating during 2023 and now (as of March 2025) stands at 2.3%. It would seem, then, that both the cost of daily life (as reflected in the rate of inflation) and the cost of debt servicing (as reflected in the Bank’s benchmark interest rate) would have both become more manageable in recent months.

Those cheering statistics, however, fail to take account of some other aspects of ongoing financial realities for some Canadians, and those financial realities are showing up in debt management statistics recently released by the credit rating agency Equifax Canada.

In February 2025, Equifax released its Q4 2024 Market Pulse Consumer Credit Trends Report. That report showed that in all provinces missed payments on most forms of consumer debt had risen from the same quarter in 2023. Perhaps most significantly, the report showed a substantial increase in the rate of missed payments on mortgage debt. Missed mortgage payments are a significant indicator of consumer financial distress since, as noted in the Equifax report, “[m]ortgage holders will typically do everything they can to keep up with payments” and “[t]he fact that we’re seeing missed payments rise so sharply suggests deeper financial strain.”

While home owners are generally perceived to have greater financial resources and financial stability than other population groups, it is homeowners who are actually most likely to be feeling the financial pinch in 2025 – and the reasons for those financial difficulties are not likely to be resolved anytime in the near future. The financial strain being experienced by homeowners is likely attributable to the “mortgage renewal wall”, a reference to the fact that so many homeowners have recently been required to renew their mortgages, or will be required to do so in the near future.

Most Canadian homebuyers, especially first-time homebuyers, take out a five-year fixed-term mortgage. On a fixed-term mortgage, the interest rate payable (and therefore the amount of the mortgage payment) is set for that five-year term, giving the homeowner certainty when it comes to budgeting. The difficulty for homeowners now is that five-year mortgages which were taken out in 2020 are coming up for renewal – and the interest rates at which those mortgages will be renewed (and therefore the required mortgage payments) are much higher than the historically low rates which were in effect in 2020.

It's a problem faced by literally millions of Canadian households. Statistics announced by the Bank of Canada in November 2024 indicate that “[M]ore than 4 million mortgages – or about 60% of all outstanding mortgages – will renew over the next two years. A big portion of these have not renewed since interest rates started rising in 2022. Even with recent declines in interest rates, most of those borrowers will likely face a significant increase in their payment.”

Of course, Canadian families who are facing substantial increases in their mortgage payments don’t really care about the micro or macroeconomic reasons for those increases. What they seek is a way to make those mortgage payments affordable – to avoid missing payments or, in a worst-case scenario, defaulting on their mortgage and losing their home.

Individuals or families who are facing what seems to be an unmanageable increase in their mortgage payment (or who have already incurred other debt in an effort to keep the mortgage paid) should understand, however, that there are viable options open to them to avoid those worst-case scenarios – and equally, that there are courses of action which should be avoided.

Where an individual or a family feels overwhelmed by debt, or unable to keep up with mortgage or other debt payments, it’s inevitable that they will be vulnerable to approaches which promise to make the problem go away quickly and easily. Sometimes those approaches come from debt settlement companies, and the website of the Financial Consumer Agency of Canada (FCAC), an agency of the federal government, notes (at Using a debt settlement company – Canada.ca) that Canadians should be aware that such companies (which go by various descriptions) are usually for-profit businesses, not service providers. Such companies collect fees from consumers who are in financial difficulty, sometimes making unrealistic commitments with respect to what they can accomplish. For instance, while such companies may promise to negotiate with creditors in order to reduce any amount owed, or the interest rate payable on existing debt, the fact is that creditors are not obliged to speak to or negotiate with a debt settlement company with respect to another person’s debts. Debt settlement companies may promise to “fix” a poor credit rating or credit report, but they have no actual power to do so. And the fees paid to such companies will almost certainly have to be paid whether or not they can actually produce the results they promise.

That reality does not, however, mean that there is no help for individuals and families who are looking at an increase in payments when they renew their current mortgage, or who are already trying to cope with increased mortgage payments. Canadian financial institutions are, in fact, expected by the Financial Consumer Agency of Canada to provide support to “consumers at risk” – and in this context, that term includes those with fixed-rate mortgages reaching near-term maturity who may be facing a material increase in payments, as well as those who are at risk of mortgage default. That support, referred to as mortgage relief measures, can include a wide range of options, including extending the amortization period of a mortgage, skipping a payment or deferring mortgage payments for a period of time, allowing the homeowner to re-negotiate a mortgage at a lower interest rate, waiving internal costs or fees, waiving pre-payment penalties where the homeowner sells their home, or not charging interest on interest. The FCAC has a webpage specifically outlining the options which can be made available to homeowners who are experiencing difficulty meeting mortgage payments, and that webpage is available at Paying your mortgage when experiencing financial difficulties – Canada.ca.

The intricacies of mortgage financing – and making a determination of the cost/benefit of the available courses of action when current mortgage payment obligations become unsustainable – are complex, and not something that most homeowners can be expected to manage without help, especially when those homeowners are under significant financial stress. There is, however, help to be had, as almost every community of any size has a credit counselling agency which can assist homeowners (or any other person or family encountering financial difficulties) in managing their current financial situation.

Such credit counselling agencies operate on a not-for-profit basis and provide their services at little or no cost to individuals or families for their services. Each such agency is a member of Credit Counselling Canada (to be a member of Credit Counselling Canada, an agency must be accredited and must operate only on a not-for-profit or charitable basis), and a listing of their member agencies and locations can be found on the Credit Counselling Canada website at https://creditcounsellingcanada.ca/locate-a-counsellor/?cc=ON. An outline of the kinds of services which are provided by such agencies is available on the same website at https://creditcounsellingcanada.ca/.

Fixing a mistake on your (already filed) tax return (May 2025)

It’s likely that very few Canadians view completing and filing the annual tax return as anything other than an unpleasant chore to be endured, with a sigh of relief once it’s finally done. The goal, for both the taxpayer and the Canada Revenue Agency (CRA), is for the return to then be “assessed as filed”, meaning that the CRA agrees with the income information provided, the deductions and credits claimed, and the final overall tax result obtained by the taxpayer. And, while the best-case scenario is for the taxpayer to have filed a return that is correct and complete and filed on time, that’s a result which can be derailed in any number of ways.

By the third week of April 2025, just under 20.5 million returns for the 2024 tax year had been filed by individual Canadians. 95% of those returns were filed using online filing methods (NETFILE or EFILE), meaning that they were prepared using tax return preparation software.

The use of tax preparation software significantly reduces the chance of making an error in the preparation of a tax return, especially clerical or arithmetical errors, like entering a figure on the wrong line of the return form or getting the wrong result when adding a column of figures. The software can also catch instances in which a taxpayer attempts to claim a deduction or credit to which they are not entitled, or situations in which the taxpayer fails to enter all required information needed for the CRA to process the return.

Notwithstanding, no matter how good a particular tax preparation software program is, it can work only with the information that is provided to it. Sometimes taxpayers prepare and file a return, only to later receive a tax information slip or receipt that should have been included on that return. It’s also easy to make an inputting error when transposing figures from an information slip (for example, a T4 slip from one’s employer) into the software, such that $73,246 in income becomes $72,346. Whatever the cause, where the figures input are incorrect or information is missing, those errors or omissions will be reflected in the final (incorrect) result produced by the software.

Whatever the cause or reason for the error or omission in an already filed return, the question which immediately arises is how to make things right. And, no matter what the reason for the error or omission, the course of action to be followed by the taxpayer is the same.

The first impulse of many taxpayers when a mistake or omission is discovered is to file another return, in which the complete and correct information is provided, but that’s not the right answer. There are, however, several ways in which a mistake or omission on an already filed tax return can be corrected, including online options.

And although it seems counterintuitive, the best course of action at least initially is to do nothing. The taxpayer must wait until the CRA has issued a Notice of Assessment with respect to the incorrect return already filed, for the very good reason that the return as filed isn’t in the CRA’s system until then. Once the Notice of Assessment is issued, however, there are three options available to the taxpayer to make the necessary correction.

Taxpayers who are registered for the CRA’s online service “My Account” can avail themselves of the Agency’s online “Change My Return” feature at Change my return: online adjustments for income tax and benefits returns - Canada.ca. The process is quite straightforward – using a drop-down menu, the taxpayer chooses the tax year for which they want to make a change on the return. They can then search for the line number on which the change is needed, or do a text search – for example, a search for “charitable donation”. While most taxpayers will be seeking to make a change/correction only on their return for the 2024 tax year, a Change my Return request made in 2025 can relate to any tax year after 2014.

Once the correct line number is found, a “New Amount” box will appear, into which the correct amount can be input. A summary page will then show the old and new numbers and, if the taxpayer is satisfied that the information is correct, they click on “Submit Changes”. A confirmation number for the changes made is then provided. The CRA will then process the information and issue a new Notice of Assessment which reflects the changes made.

At one time, the process of becoming registered for My Account was somewhat cumbersome, as the taxpayer had to wait about 10 days to receive a CRA issued security code, which was sent by regular mail. That process has been streamlined, and registration for My Account can now be done in real time through what the CRA terms “document verification”. This document verification process requires a user to take a picture of their government-issued photo identification and of themself in order to verify identity. For purposes of this process, the only acceptable photo identification documents are a Canadian passport, Canadian drivers’ licence, or provincial/territorial photo ID card. More information on how to register for My Account using the document verification method can be found on the CRA website at About My Account – CRA account help - Canada.ca.

Taxpayers who are not registered for My Account and do not choose to register, but who have filed their tax return using one of the Agency’s electronic filing services (whether NETFILE or EFILE) can make a correction to their return by using the Agency’s ReFILE service. Like the Change my Return feature, the ReFILE service (available at https://www.canada.ca/en/revenue-agency/services/e-services/e-services-businesses/refile-online-t1-adjustments-efile-service-providers.html) enables taxpayers to make corrections to an already filed return online, on the CRA website.

Essentially, taxpayers whose returns have been filed online (through NETFILE or EFILE) can make a correction using the same tax return preparation software that was used to prepare the return. However, the number of tax years for which a change/correction can be requested is shorter than that available through My Account/Change my Return. Taxpayers who used NETFILE or EFILE to file their 2024 tax return can file an adjustment to a return filed for the 2021, 2022, 2023, or 2024 tax years.

There are other limitations to the ReFILE service. ReFILE cannot be used to make changes to personal information, like the taxpayer’s address, marital status, or direct deposit details. There are also some types of tax matters which cannot be handled through ReFILE, like applying for a disability tax credit or the Canada child benefit.

While using the CRA’s online services, whether through My Account/Change my Return or ReFILE, is certainly the fastest way to make a correction on an already-filed return, taxpayers who don’t wish to use an online method do still have a paper option. The paper form to be used is Form T1-ADJ E (23), which can be found on the CRA website at T1-ADJ T1 Adjustment Request - Canada.ca. Form T1-ADJ E (23) can be used to request a change to a tax return filed for any tax year, once the return for that year has been filed and a Notice of Assessment issued.

Hard copy of a T1-ADJ E (23) (or a letter) is filed by sending the completed document to the appropriate Tax Centre, which is the one with which the tax return was originally filed. A listing of Tax Centres and their addresses can be found on the reverse of Form TD-ADJ E (23). As well, the taxpayer can go to https://www.canada.ca/en/revenue-agency/corporate/contact-information/tax-services-offices-tax-centres.html on the CRA website and select their location from the drop-down menu found there. The address for the correct Tax Centre will then be provided.

Where a taxpayer discovers an error or omission in a return already filed, the impulse is to correct that mistake as soon as possible. However, it’s important to remember that no matter which method is used to make the correction – My Account/Change my Return, ReFILE, or the filing of a T1-ADJ E (23) in hard copy – it’s necessary to wait until the Notice of Assessment for the return already filed is received. Corrections to a return submitted prior to the time that return is assessed simply can’t be processed by the CRA.

The CRA’s goal is to process changes which are requested online within a two-week period. Requests for changes which are sent by mail using Form T1-ADJ (E) 23 take longer – usually about eight weeks. However, a notice on the CRA website indicates that the Agency currently has a significantly higher-than-normal inventory of mail requests, resulting in processing delays for adjustment requests sent by mail.

A summary of the methods by which a tax return can be changed/corrected, which includes links to detailed information on each such method, can be found on the CRA website at How to change your return - Canada.ca.

New Quarterly Newsletters (Q1 2025)

Two quarterly newsletters have been added – one dealing with personal issues, and one dealing with corporate issues.