Small Business Taxation: What’s Changing This Fiscal Year?

The 2025 fiscal year brings several notable tax policy changes for small and medium-sized enterprises (SMEs) in Canada. In a bid to enhance transparency and streamline compliance, the Canada Revenue Agency (CRA) has updated its digital filing requirements and introduced new audit practices.

A major shift is the requirement for all businesses with gross revenue above $250,000 to submit real-time electronic invoicing (e-invoicing). This aligns Canada with OECD standards and aims to curb underreporting. Additionally, hybrid and remote businesses can now claim simplified home office deductions, up to a maximum of $3,000 annually per employee.

On the incentives side, the federal government has expanded the Accelerated Investment Incentive, which allows faster depreciation of assets used in green or digital business operations. This measure is expected to benefit startups and tech-driven consultancies that require high upfront capital expenditure.

However, compliance is getting stricter. CRA has increased random audits, particularly in high-cash industries and among gig-economy contractors. Fines for inaccurate HST/GST reporting have doubled, and new AI-assisted audit tools are already flagging anomalies in returns.

To navigate these changes, tax advisors recommend early reconciliation of income and expenses, cloud-based bookkeeping tools, and regular internal audits. With the right strategy, most SMEs can not only stay compliant but also take full advantage of new deductions and incentives.