Download the Complete 2023 Commentary Here >

 

On March 28, 2023, the Deputy Prime Minister and Finance Minister, the Honourable Chrystia Freeland, presented Budget 2023 – A Made-in-Canada Plan: Strong Middle Class, Affordable Economy, Healthy Future, to the House of Commons.

No changes were made to personal or corporate tax rates or to the inclusion rate on taxable capital gains. Some highlights include the following:

A. Personal Measures

• Modifications to the alternative minimum tax regime focused on high-income individuals.
• A one-time grocery rebate equal to two quarterly GST/HST credit payments.
• Additional flexibility and possibilities with Registered Disability and Registered Education Savings Plans were introduced.

B. Business Measures

• Modifications to the intergenerational business transfer rules to set requirements for activity by the children in the business and the transfer of control, equity ownership and management from the parents to the children.
• Introduction of the employee ownership trust structure to provide a mechanism for business owners to transfer ownership in their private corporations to employee groups.
• Several investment tax credits and other incentives were introduced or modified to encourage investment in clean energy.

C. International Measures

• Confirmation of the government’s intention to introduce legislation implementing the income allocation rule and a domestic minimum top-up tax applicable to Canadian entities of multinational enterprises consistent with the OECD’s BEPS initiatives.

D. Sales and Excise Tax

• Increasing the air travellers security charge, limiting increases to alcohol excise duties for one year and adjusting the cannabis excise duty remittance frequency.

E. Other Measures

• New income-tested dental care program for uninsured Canadians.

F. Previously Announced Measures

• Intention to proceed with previously announced measures, including those related to excessive interest and financing expenses limitations; reporting rules for digital platform operators; extension of the residential property flipping rule to assignment sales; substantive Canadian-controlled private corporations; the mandatory disclosure rules; the electronic filing and certification of tax and information returns; and GST/HST changes in respect of cryptoasset mining.

Download the Complete 2023 Commentary Here >

Many private Canadian corporations, trusts and partnerships will be exempt from the tax, but must still file the return (UHT-2900 Underused Housing Tax Return and Election Form), in order to claim their exemption.

The penalties for affected owners for non-filing are a minimum of:

• $5,000 per individual per property, or
• $10,000 for non-individuals
• In addition to the minimum above penalties, add:
• 5% of the tax calculated for the calendar year, plus
• 3% of the tax calculated multiplied by the number of complete months that the return is late.

If you are in the business of constructing and selling residential houses, you are still required to complete a UHT return if you owned the property as of December 31, 2022. However, tax exemptions may apply under specific conditions related to the property’s completion date and sale status.

The new Underused Housing Tax (UHT) imposes a 1% annual tax on the value of residential real estate considered to be vacant or underused that is owned on December 31 of each year. The government indicated that the tax would target property owned by non-Canadians; however, the scope of filing requirements extends to many Canadian entities and individuals, including private corporations, partnerships and trustees of a trust. The first filings and taxes are due on April 30, 2023, but no penalties or interest will be applied for UHT returns and payments that the CRA receives before November 1, 2023.

This summary is intended to be a general guide in determining filing obligations and tax exposure. The specific legislation, regulations and CRA administrative policy should be reviewed for a complete and detailed understanding.

This form is used by rental property owners to report their rental income and expenses for income tax purposes.

Canada Emergency Response Benefit to Help Workers and Businesses

In the early morning hours of March 25, 2020, Bill C-13 “An Act respecting certain measures in response to COVID-19“ was introduced, and received Royal Assent by the afternoon.

Details on a number of measures previously announced (see Canada’s COVID-19 Economic Response Plan) were disclosed.  One common theme throughout the legislation is the ability to change specific amounts and rules by updating regulations rather than law, which means the government has more flexibility in making changes as events unfold.  The key items discussed in this document include:

• Emergency Response Benefit;
• GST tax credit special payment;
• Canada child benefit special payment;
• RRIF minimum withdrawal changes; and
• Temporary wage subsidy for employers.

Read the full publication prepared by Video Tax News.

Temporary Wage Subsidy for Employers

Canada Revenue Agency has posted on their website how the Temporary Wage Subsidy for Employers will operate over the next 3 months.

Employers will reduce their monthly source deductions remittance (subsidy is 10% of remuneration you pay between March 18, 2020 and June 20, 2020, up to $1,375 per employee to a maximum of $25,000 per employer).
Large corporations with >$15 million in taxable capital are not eligible. Not for Profit Organizations, charities and Canadian Controlled Private Corporations that have a business number for payroll and pay wages are eligible.
Frequently asked questions and details about the Temporary Wage Subsidy are found here.
If you receive the subsidy, you have to report the total amount as income in the year in which the subsidy is received.
If you did not pay salary, wages, bonuses, or other remuneration to an employee between March 18, 2020, and June 20, 2020, you cannot receive the subsidy, even if you are an eligible employer.

Understanding Mortgage Payment Deferral

Homeowners may be eligible for a mortgage payment deferral up to 6 months to help ease financial hardship. For more details, click here.

Helping Canadians with the Economic Impact of the Pandemic

A summary of important changes to tax-filing and payment deadlines is found here.

Government Programs & Resources for Business

From the Chamber of Commerce website (www.chamber.ca or click here)
Canada’s COVID-19 Economic Response Plan: Support for Canadians and Businesses
Business Development Bank of Canada: Business continuity plan and templates for entrepreneurs
Business Development Bank of Canada: Support for entrepreneurs impacted by coronavirus
Coronavirus disease (COVID-19): Resources for Canadian businesses
Coronavirus disease (COVID-19): Employment and Social Development Canada
Export Development Canada: COVID-19
Work-Sharing Program: Temporary special measures
Government of Canada: Mass Gatherings Risk Assessment

The Government of Canada is taking immediate, significant and decisive action to help Canadians facing hardship as a result of the COVID-19 outbreak.

On March 18, 2020, the Prime Minister announced a new set of economic measures to help stabilize the economy during this challenging period. These measures, delivered as part of the Government of Canada’s COVID-19 Economic Response Plan, will provide up to $27 billion in direct support to Canadian workers and businesses.

Read the details for Individuals and Businesses here.

We have put together a few of the personal tax write-offs and credits that we see missed most often, as well as a few little known tax tips. If you think you may have missed any of these in the past, your returns may be able to be amended, so let us know!

Topics include:

• Top Missed Tax Credits
• Tips
• Federal Changes
• Ontario Changes

View or Download Booklet

Read about the past year’s personal tax changes and how they affect you and the changes made by the government of Ontario.

• Principal Residence Exemption
• Tax Rate Changes
• Families With Children
• Teacher and Early Childhood Educator School Supply Credit
• ReFile
• Taxation of a Professional’s Work in Progress
• Public Transit Credit
• Home Accessibility Tax Credit
• Minimum Wage
• Vacation Time
• Personal Emergency Leave
• OHIP+ Program

View or Download Booklet

For details on the Technical Backgrounder on Measures to Address Income Sprinkling from the Department of Finance please refer to this document.

For a summary of the January 1, 2018 Income Sprinkling tax changes please consider this PWC Tax Insights article.