As we look back on 2025, one theme stands out for business owners and investors alike: change came quickly, and not always smoothly. From capital-gains uncertainty to shifting CRA reporting rules, this was a year that demanded clarity, planning, and steady guidance.
Looking ahead to 2026, the pace won’t slow, but the direction is becoming clearer. Here is a summary of the past year and the key tax and financial planning considerations that should shape your decisions heading into the new year.
2025: A Year of Adjustments
Capital Gains: A Year of Uncertainty Ending With Some Clarity
The conversation around capital gains dominated much of 2025. Rules appeared, shifted, and shifted again, leaving many people unsure of how to plan or whether to act. As the year unfolded, things finally started to settle and the guidance became more workable. That shift gave business owners and investors a chance to revisit their plans with a clearer sense of direction. It wasn’t the smoothest transition, but it highlighted something important: when tax changes evolve this fast, staying nimble and getting advice early makes a real difference.
Trust and Bare-Trust Reporting: From Confusion to Reality Check
Anyone involved with a trust, especially bare trusts, likely felt the growing pains of this new reporting regime. As the rules rolled out, many people discovered that long-standing arrangements they assumed were straightforward actually came with filing requirements. Even with additional guidance from the CRA, it still took work to sort out what applied and what didn’t. Thankfully, reporting for bare trust arrangements is now being deferred again for one year. This was welcome news as the government works to narrow down what, if any, reporting they want on this front going forward.
Mandatory Disclosure Rules Take Hold
The expanded disclosure rules changed how many organizations approached routine planning. Structures and transactions now need a closer look, and in some cases, additional reporting. The bar for what must be disclosed also shifted, which meant more conversations with advisors throughout the year rather than at tax time alone. For businesses with layered ownership or more complex activity, staying organized and documenting decisions became far more important than before.
Budget 2025 and the “Productivity Super Deduction”
One of the standout budget announcements was the introduction of the Productivity Super Deduction, a measure intended to encourage business investment in certain capital assets and technology. Although the deduction doesn’t begin until 2026, 2025 became the planning year where companies should be reviewing their capital budgets, evaluating future equipment needs, and assessing how to time expenditures to maximize the upcoming benefit.
2026 Outlook: A Year to Plan and Position for Growth
Capital Gains Planning: LCGE at $1.25M, With Indexation Ahead
With the $1.25M Lifetime Capital Gains Exemption set to increase for indexation starting in 2026, business owners have new planning opportunities to consider. Timing and structure will play a major role in determining who can access the exemption and how much benefit it provides.
The Productivity Super Deduction Comes Into Force
With the measure now active, businesses should revisit their capital investment strategies. The deduction may reduce after-tax costs of certain equipment, technology, and other qualifying assets, making 2026 an advantageous year for modernization and efficiency improvements.
SR&ED: Use the Enhanced Measures, or Lose Them
With enhancements to SR&ED now in effect – with an increase to the enhanced expenditure limit to $6M, allowing the enhanced investment tax credit of 35% to apply to certain small Canadian public companies, and allowing a 100% deduction for certain capital expenditures – businesses must ensure proper documentation and timely claims. The revised program offers more value to those who qualify. Those who treat SR&ED as an afterthought risk missing out entirely.
Falling Interest Rates Renew the Value of Inter-Spousal and Trust Loans
If interest rates continue to decline, income-splitting strategies such as prescribed-rate loans or trust loans may become more appealing again. Families looking to rebalance income or fund long-term planning should evaluate whether 2026 presents a window of opportunity.
A Tighter CRA Audit Environment
Businesses have started to see a noticeable change in how the CRA conducts audits. Information requests are arriving sooner, and the follow-up questions are more detailed than in previous years. Areas such as shareholder loans, real estate transactions, and trust reporting seem to be drawing closer scrutiny. It isn’t that the rules themselves have changed dramatically, the level of attention has. Strong documentation and consistent internal processes are becoming essential to keep audits efficient and manageable.
Cash Flow and Working Capital Analytics Take Centre Stage
With higher costs, fluctuating demand, and lenders being more selective, owners are paying much closer attention to the rhythm of their cash flow. The days of infrequent working capital reviews are long gone. More organizations are leaning on rolling cash forecasts, better reporting tools, and regular check-ins to stay ahead of tight spots. Those who build this discipline into their operations early will be in a much stronger position heading into 2026.
AI Bookkeeping Grows But With Clear Limits
AI-driven accounting tools continue to improve, offering efficiency and speed. But 2025 demonstrated that automation still struggles with judgment-based work, complex transactions, and evolving tax rules. In 2026, AI should become a helpful assistant, not a replacement.
Final Thoughts
As we move into 2026, the themes are becoming clearer: more certainty around capital gains, new incentives for productivity investments, and a tax environment that demands thoughtful planning. For owners and families, this is a year where preparation pays off. Whether you’re revisiting succession plans, upgrading equipment, or tightening internal controls, having the right advice will make these decisions easier and far more effective.
If you’d like support evaluating how these changes affect your business or tax strategy, our GGFL team is here to help.
