Crowe MacKay’s tax experts share insight on Canadian tax changes announced by the Federal Government impacting individuals, families, and businesses.
Alternative Minimum Tax (AMT) Changes
The calculation of alternative minimum tax is complex, and, generally speaking, it is in place to help ensure that an individual pays less than what is termed “base tax,” an additional amount of tax is levied. Several changes to the calculation of AMT are proposed to take effect in 2024, increasing the amount of adjusted taxable income that will be subject to AMT.
Short-term Rentals Including Airbnb
Measures are being proposed to prevent short-term rental operators from deducting expenses against their rental income in situations where they are not compliant with the short-term rental regulations of their local municipality. The proposed measures would deny all expenses against income that has been sourced from a short-term rental. These measures would take effect as of January 1, 2024.
Trust Reporting Requirements
There are new reporting requirements for trusts requiring most trusts to file a T3 return, regardless of income or activity levels (with some exceptions; see below). The new reporting requirements were first proposed in the 2018 Federal Budget, and the implementation has been delayed to apply to trusts with taxation years that end on or after December 31, 2023. They will be required to disclose information about the settlor, trustees, and beneficiaries (including contingent beneficiaries), such as their name, address, date of birth, jurisdiction of residence, and taxpayer identification number (e.g., SIN).
Certain trusts are excluded from these new rules, including:
- Trusts that have been in existence for less than three months
- Trusts that hold assets with a maximum of $50,000 in fair market value throughout the year (these assets are limited to deposits, government debt obligations, and listed securities)
- Graduated rate estates
- Qualified disability trusts
There are significant penalties for non-compliance, so you should start gathering the required information if these rules apply to you.