Yesterday (April 16, 2024), the Department of Finance Canada published its 2024 federal budget (“Budget 2024”). Several major tax proposals were announced. This blog post briefly outlines those relating to income tax. 1. Increased Capital Gains Inclusion Rate  Budget 2024 announced the Federal Government’s intention to amend the Income Tax Act (Canada) (the “Act”) to increase the taxable portion of capital gains from one-half to two-thirds in respect of: capital gains realized by an individual in a year exceeding $250,000, and capital gains of any amount realized by a trust or a corporat ..read more

Yesterday, the Department of Finance announced GST relief for new residential rental construction.  In addition to signaling a reduction in the cost of supplying new rental homes, the measure potentially reduces or eliminates a major source of friction between developers and the Canada Revenue Agency (“CRA”). This is a significant change for developers and their advisors. Although there is no draft legislation just yet, the following is a summary of the expected changes based on the Department of Finance’s recent announcement: Finance is not revoking the “self-supply” GST rule. Rather, t ..read more

The recently enacted “flipped property” rules in the Income Tax Act (Canada) (the “Act”) have wide ranging implications. Several tax practitioners have written about the problematic nature of the rules (see, for example: Evan Crocker and Kenneth Keung, “Related-Party Transfers and the Flipped Property Rules” (2023) 23:2 Tax for the Owner-Manager 6-8). In this blog, we describe a further issue, namely, the lack of exemptions applicable to certain deemed dispositions of trust property. Overview of the flipped property rules By way of background, on December 15, 2022 the new “flipped property” ru ..read more

According to data available on its website, the Canada Revenue Agency (the “CRA”) completed approximately 12,000 “real estate” audits in British Columbia for both income tax and goods and services tax/harmonized sales tax (“GST/HST”) between April 2015 and March 2022. These audits resulted in tax assessments topping $1.1 billion. An additional 54,000 real estate audits were completed in Ontario during the same time period, resulting in another $1.1 billion worth of assessments. It is critical for taxpayers and their advisors to be aware of the tax rules governing real estate transactions. This ..read more

Authors: Alexander Demner, Tyler Berg, and Gloria Wang The federal government released its 2021 budget on April 19, 2021. Coming in as the longest budget in Canadian history, Budget 2021 proposes a myriad of income tax measures. This blog provides an overview and critical analysis of the most significant income tax proposals which are of primary relevance to businesses, accountants, and other tax advisors. This article does not analyze the digital services tax announced in Budget 2021; see our earlier detailed blog on the digital services tax here. For brevity, this article also does not subst ..read more

On May 19, 2020 the CRA published administrative relief (found here) for taxpayers who might otherwise be facing Canadian tax residency or cross-border issues as a result of travel restrictions imposed in light of the COVID-19 crisis. Certain potential tax issues and the CRA’s temporary approaches to each are summarized below. The guidance published by the CRA was initially set to apply from March 16, 2020 until June 29, 2020, but the end date has been extended to at least August 31, 2020. Note, this post has been updated to include further public statements made by the CRA regarding waivers a ..read more

Introduction In 2017, the City of Vancouver introduced its annual residential vacancy tax (or “empty homes tax”). At that time, the tax rate was 1% of the assessed value of a subject property. The governing statute and administration program were relatively simpler than more substantial taxes like income tax and GST/HST. However, the City has steadily increased the tax rate over the years. On January 1, 2023, it will hit 5%. This equals the rate of the federal GST and the highest rate of the province’s property transfer tax. Crucially, however, those are largely one-time taxes imposed on homeo ..read more

Vacant housing taxes came into effect in Toronto and Ottawa for 2022, meaning that homeowners will have to file their first occupancy status declaration by February 2023 (for Toronto) and March 2023 (for Ottawa). Toronto’s portal is now open for online filing. The City of Ottawa’s filing portal is set to open shortly, in January 2023. Toronto’s “vacant home tax” and Ottawa’s “vacant unit tax” are both modelled after Vancouver’s “empty homes tax”, which has been in effect since 2017. The City of Hamilton has announced that it intends to introduce a similar “vacant home tax” in January 2023, whi ..read more

When a real property held by a taxpayer as a rental property becomes the taxpayer’s residence (or vice versa), the “change-in-use” rules in section 45 and subsection 13(7) of the Income Tax Act (the “ITA”) are triggered. Subsection 45(1) provides that when a taxpayer, having acquired property for the purpose of earning income, has commenced at a later time to use it for some other purpose (or vice versa), the taxpayer is deemed to have disposed of the property for fair market value at the time of the “change-in-use” and to have reacquired the property for that same amount. The deemed dispositi ..read more

Authors: Gloria Wang, Sarah Faber, and Alexander Demner Budget 2022: A Plan to Grow Our Economy and Make Life More Affordable (“Budget 2022”) was tabled by the Federal Government on April 7, 2022 (“Budget Day”). The government professed a desire to return to fiscal responsibility after two years of COVID-19 support measures, and introduced a number of significant income tax proposals in furtherance thereof. Our recent post by Jennifer Flood and Greg DelBigio reviewed the proposals designed to increase the CRA’s enforcement powers and prosecute financial crime. In this post, we discuss certain ..read more