Taxes

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Since its launch on January 1, 2022, the Underused Housing Tax (UHT) has left cottagers’ heads spinning as they try to figure out whether it applies to them. The UHT is a federal one per cent tax levied annually on the ownership of vacant or underused housing. Primarily, this applies to foreign owners with properties in Canada that are occupied for less than 180 days per year. However, the complexity of the tax has left some grey areas.

The lack of timely, comprehensive and relevant information on aggressive tax planning strategies is one of the main challenges faced by tax authorities worldwide. Early access to such information provides the opportunity to respond quickly to tax risks through informed risk assessments, audits and changes to legislation.

It’s been a busy year in the tax world, with ever changing tax legislation and administration to keep on top of. We’ve rounded up some key tax developments that practitioners should have on their radar as we enter the fall:

Government releases significant draft tax legislation package – On August 4, 2023, the Department of Finance released a package of draft legislative proposals, to implement various tax measures, update certain previously released draft legislation, and make certain technical changes.

The draft legislation covers a wide variety of measures, and includes:

- Intergenerational business transfers
- Employee ownership trusts
- Alternative Minimum Tax
- Revised Excessive Interest and Financing Expenses Limitations (EIFEL) rules and GAAR amendments
- Digital services tax and the global minimum tax (Pillar two)
- Numerous green initiatives

Finance has launched public consultations on the proposals, with comments to be submitted by September 8, 2023 (or by September 29, 2023, for submissions on the global minimum tax).

While there are fewer new measures than in previous years, those that have been introduced are significant.
With tax season upon us, it’s a good time to review some of the main personal tax updates that you will need to consider this filing season and beyond.

“It has been a relatively light year for personal tax changes,” says Bruce Ball, FCPA, CPA Canada’s vice-president of taxation. “But there are key changes and new developments that individuals need to be aware of when filing their returns in 2023.”

Following is a brief look at what’s new for 2022 personal tax returns, important reminders of existing rules which will apply to 2022 returns and changes that will apply in 2023 and beyond.

The federal government has released new details about a new type of registered savings plan aimed at helping Canadians save for their first home. Find out who qualifies and other key features of these plans.

CPA Canada co-hosted a webinar with the CRA to review updates to the SR&ED program. In this session, CRA provides an overview of the program and highlights upcoming initiatives that will transform it. CRA also reviews some of the most common trends they are seeing on the field and answers some of the top questions heard from CPA Canada's SR&ED Committee.

In some cases, it’s possible to apply for relief from penalties and interest, although the taxes themselves cannot be waived. 

Current and comprehensive, CPA Canada’s Tax Suite news and research package connects you to the information you need on income tax, GST/HST and provincial taxes.

Your source for the latest Canadian tax news and updates on changing tax laws. Working collaboratively with the Canada Revenue Agency (CRA) we aim to bring clarity on pressing tax questions and COVID-19 tax updates.

Tax rules announced in Budget 2018 will require more trusts to file returns and all trusts to report more information. Find out what you need to know to prepare your clients for the new regime.

Here are some key considerations to keep in mind when dealing with income tax objections for taxpayers.
As tax practitioners know, clients sometimes receive a notice of assessment or determination that does not agree with their income tax return. And, depending on the complexity of the issue, the solution can range from requesting a simple adjustment to objecting, to eventually filing an appeal with the Tax Court of Canada.

2022 personal tax season: What’s new for 2021 tax returns

As practitioners gear up for the 2022 personal tax season, find out about the latest changes to the Canada Revenue Agency (CRA)’s T1 tax return filing program so you can better serve your clients.

A better way of designing new tax legislation

As the government gradually transitions towards a more forward-looking agenda, now is a good time to examine tax legislative processes and consider better practices for managing tax change.

Are you up to date on the latest tax changes?

Every year brings its share of tax updates and 2021 was no different. Here are some of the main administrative and legislative changes to keep in mind as we move into busy season.

Ottawa should carefully weigh new tax changes, expert says

Bruce Ball, FCPA and VP of taxation with CPA Canada, explains why any new proposals should be considered from the perspective of necessity and urgency, and why regular communication is crucial.

Simpler measures, better outcomes: It’s time to rethink tax expenditures

Sound tax policy is key to building a better, fairer Canada. Our brief explores why the government should be cautious in adding any new tax expenditures to Canada’s overly complex tax system.

CPA Canada Resources

With so many enhancements in the works for the Canada Revenue Agency’s (CRA) services, it’s hard to keep track. We asked the CRA to share the most important changes that tax practitioners should know about.
At the latest meeting of the CRA-CPA Canada Technology Working Group — where tax practitioners, tax software developers and CRA officials came together to preview and brainstorm ways to improve CRA digital service options for taxpayers and their representatives — the CRA answered questions about a variety of upcoming changes and enhancements in these areas:

CPA Canada recognizes that the Canada Revenue Agency’s (CRA) initial guidance, released on July 5th, did not address all our members questions regarding administration of the rules. The objective of CRA’s initial guidance was to ensure timely guidance was provided to taxpayers and their advisors.

Baker Tilly Canada’s John Oakey, CPA, offers an overview of what we know—and don’t know—about the tax implications around crypto in Canada today.
Since crypto investing and trading have become mainstream, the tax implications of cryptocurrency have become an increasingly important issue. At this stage, there are a number of areas where there is still some confusion around compliance with tax rules. We spoke to CPA John Oakey, national director of tax services at Baker Tilly Canada, about what we know—and don’t know—about the current tax implications of cryptocurrency.

A number of factors need to be considered before filing a voluntary disclosures program application, including the size of the sum in issue and whether any intentional conduct was involved.
Practitioners who deal with cases under the CRA’s Voluntary Disclosures Program typically prefer to pursue the general program which, as the CRA points out, is intended for taxpayers who want to come forward and correct unintentional errors. But there is a limited program as well. According to the CRA, this generally applies to taxpayers who have somehow intentionally avoided their tax obligations.

On November 21, the Deputy Prime Minister and Minister of Finance released the federal government’s 2023 Fall Economic Statement (FES), which contained some new tax announcements along with an update on previously announced tax measures. Please see our summary of key changes and updates below.On November 21, the Deputy Prime Minister and Minister of Finance released the federal government’s 2023 Fall Economic Statement (FES), which contained some new tax announcements along with an update on previously announced tax measures. Please see our summary of key changes and updates below.

From policies and education to system implementation and documentation, a good tax practice embraces the need for more rigour in all aspects of operations. Any practitioner who performs tax services knows how inherently complex and challenging the area can be. “Since the rules are constantly changing, this kind of work is risky by nature,” says FCPA Bruce Ball, vice-president of taxation at CPA Canada.

During 2023, CPAs across the country were canvassed to pose the top questions they have for the CRA. Some of the topics covered include:

Update on audit initiatives and the future of desk audits and other remote work
Guidance on exempt income and research grants
Home office expenses and automobile expenses
Automatic adjustments
Misallocated personal tax payments in My Account
Communicating with CRA
Electronic services enhancements
Update on special elections and returns
Policy on electronic signatures
Guidance on cryptocurrency

The federal government’s new underused housing tax (UHT) may be aimed primarily at non-residents of Canada, but others may also be caught. Find out more about the UHT and when it applies.
In Budget 2021, the federal government announced plans for an annual one per cent tax on the value of residential real estate that is:

The federal government has released final legislation on expanded tax reporting requirements aimed at detecting and preventing inappropriate tax plans. Find out about the final proposals, improvements and concerns that are still outstanding.

Important asks for the 2023 federal budget include a national whistleblower protection framework; compensation study released and other news from the accounting profession.
PRE-BUDGET CONSULTATION: CPA CANADA’S RECOMMENDATIONS RELEASED
CPA Canada has released its annual pre-budget submission with three key recommendations for the 2023 federal budget:

Your source for the latest Canadian tax news and updates on changing tax laws. Working collaboratively with the Canada Revenue Agency (CRA) we aim to bring clarity on pressing tax questions and COVID-19 tax updates.

CPA Canada responds to the budget’s delivery on issues relating to fiscal anchoring, sustainable finance and AML efforts.
In response to the impacts of the pandemic, the war in Ukraine, and other economic pressures, including inflation and supply chain disruptions, on April 7, the federal government tabled its first budget since the last federal election.

FCPA Bruce Ball, vice-president of taxation at CPA Canada, shares the three main considerations for governments to consider when developing new tax laws.

When the pandemic took hold and the country locked down, the federal government had to act fast. Regular processes for making laws were sped up or skipped to get financial support into the hands of Canadians and their businesses as quickly as possible. More recently, the government has turned to its broader agenda, seeking to implement a host of tax measures promised in recent election campaigns and federal budgets.

The Canada Revenue Agency is escalating their scrutiny of personal services businesses, and the consequences for breaching these tax rules can be severe. Find out what you need to know about the CRA’s campaign.

As more individuals and sole proprietors in Canada are choosing to incorporate, it has become essential to assess if the formed corporation is operating as a PSB and how that can impact the entity’s tax situation. 

Canadian federal government releases significant package of draft tax legislation

On February 4, 2022 the federal government released a package of draft legislation to implement various tax measures (Proposals), including some previously announced in the 2021 Federal Budget. The Proposals include amendments to both the Income Tax Act (ITA) and the Excise Tax Act (ETA). The news release that accompanied the Proposals invites Canadians to make submissions in respect of the Proposals, with different deadlines for the different measures.

Department of Finance consulting on draft tax proposals

Canada’s strong and essential social safety net is built on a robust national tax base.

Extension to Local Lockdown Program and Worker Lockdown Benefit

On February 9, 2022 the Federal government announced that the enhanced access to the Local Lockdown Program (LLP) and the Canada Worker Lockdown Benefit (CWLB) (announced on December 22, 2021) would be extended by one month, to March 12, 2022 as follows:

Finance releases draft legislation for 2021 budget measures

On 4 February 2022, the Department of Finance released for public comment draft legislative proposals (and accompanying explanatory notes) to implement most of the remaining measures from the 2021 federal budget, postpone application of previously announced measures pertaining to new reporting requirements for trusts, introduce amendments relating to allocations to redeemers by mutual fund trusts (including extending the rules to mutual fund trusts that are exchange-traded funds), introduce rules respecting the application of GST/HST to crypto asset mining, and make certain other technical amendments.

Self-employed? Talk to a CPA long before filing your taxes

Tax time can be tricky for almost anyone, but this can be especially true for those who work for themselves. Turning to a CPA when filing—or better yet, in the months before—can help reduce the inevitable headache and possibly the amount of money owed in late fees or missed deductions through several well-prepared steps.

The tax implications of employees working remotely abroad

Before granting an employee’s request to telework from another country, employers need to ensure the organization is meeting all its obligations.

You’ve just learned CRA intends to review your tax return. Now what?

By educating yourself on the process and making sure you have all your important records on hand, you can save yourself a lot of unnecessary worry.

Reporting Requirements for Trusts

The legislation to support this proposed measure is pending. The CRA will administer the new reporting and filing requirements once there is supporting legislation that receives Royal Assent. The CRA will continue to administer the existing rules for trusts, under enacted legislation. The proposed beneficial ownership reporting requirements will not be part of the published 2021 T3 income tax return. This note will be updated when more information is available. You should not delay filing your 2021 T3 tax return.

Canadian tax news and COVID-19 updates

Your source for the latest Canadian tax news and updates on changing tax laws. Working collaboratively with the Canada Revenue Agency (CRA) we aim to bring clarity on pressing tax questions and COVID-19 tax updates.

CRA provides update on home office expense deduction

On 18 January 2022, the Canada Revenue Agency (CRA) provided a long-awaited update on the process for claiming home office expenses for the 2021 taxation year.

For the most part, the process for 2021 will be substantially similar to the process that the CRA introduced for 2020 as a result of the COVID-19 pandemic.

Dentons - Employee or independent contractor?

The issue of whether an individual is an employee or an independent contractor can have far-reaching effects on both the individual and the company for whom they provide services. However, companies often pay little attention to either the distinction between the two statuses or the possible effects of an incorrectly described relationship.

Rise of electric vehicles raises tax concerns

As EVs are poised to take over the roadways in the decades ahead, what will become of the gas tax?

Tax treatment of cryptocurrency for income tax purposes.

The following pages outline the income tax implications of common transactions involving cryptocurrency. When we refer to cryptocurrency in this publication, we are talking about Bitcoin or other similar virtual currencies.

CPA CANADA CHAMPIONS THE CANADIAN IDEAL OF GOOD BUSINESS

CPA Stories & Opportunities

Re-elected government’s agenda for tax

In their 2021 federal election campaigns, Canada’s political parties made lots of promises about tax. With the election over and the government re-elected, find out what tax changes could be on the way.

CRA e-service improvements: Key initiatives

As the Canada Revenue Agency (CRA) works to create an increasingly digital tax system, practitioners will soon enjoy new e-service options for information returns, special elections and more. Find out what’s in the pipeline.

2021 post-federal election analysis

Liberals re-elected to Parliament amid prolonged economic disruption.

Advocating for a better tax system

The pandemic has forged even more effective collaboration between CPA Canada and the CRA as we continue to find ways to improve.

Canadian tax news and COVID-19 updates

Your source for the latest Canadian tax news and updates on changing tax laws. Working collaboratively with the Canada Revenue Agency (CRA) we aim to bring clarity on pressing tax questions and COVID-19 tax updates.

Tips on running a high-quality tax practice

Practicing tax is complex and missteps are costly. Learn about some common issues leading to recent professional liability claims and how you can mitigate tax risk to make your practice more productive and profitable.

The tax implications of employees working remotely abroad

Before granting an employee’s request to telework from another country, employers need to ensure the organization is meeting all its obligations

DIGITAL CURRENCIES AND TAX IN CANADA: A BRIEF OVERVIEW (UPDATED)

This article is an amendment to one released in 2018, as more information, rulings, and interpretations have subsequently been released by Canada Revenue Agency.

New standard on compilation engagements: What does it mean for tax work?

What’s the impact of the new Canadian Standard on Related Services (CSRS) 4200, Compilation Engagements, on tax compliance work? Understand how the new standard applies to tax-related engagements and more.

Budget 2021 Focuses on Financial Support and Recovery

3 Ways CPAs can Simplify Their Clients’ Personal Taxes During the Pandemic

Depending on the benefits their clients accessed, CPAs need to keep tabs on the federal COVID-19 emergency programs in order to accurately assess the tax impact on those clients.

Tax and the Digital economy: Significant Concerns over OECD Proposals

The Organization for Economic Co-operation and Development (OECD) consulted the international tax community on proposals for taxing digital transactions, and CPA Canada contributed our suggestions. Find out how the OECD responded in its latest statement.

Tax Resources for CPAs

Get fresh perspectives on trending tax issues through our news roundup, blog, webinars, and other practical tools. Created for CPAs and the broader tax community, our resources will help you stay current on changing tax laws.

Taxing Cryptocurrencies: GST/HST Proposals Raise Concerns

With the rise of cryptocurrencies, uncertainty is growing over their tax treatment. Learn about existing Canada Revenue Agency (CRA) guidance, as well as CPA Canada’s concerns with newly proposed GST/HST legislation.

Other Resources

AICPA Supports Setting Standards for Tax Preparers

The American Institute of Certified Public Accountants announced its support for a recent U.S. proposal to provide the Department of the Treasury with undefined authority to regulate paid tax-return preparers.

Auditing Accounting Estimates in the Current Evolving Environment Due to COVID-19

This publication has been prepared to highlight key areas of focus in the current environment when undertaking audit procedures relating to accounting estimates and related disclosures in accordance with the International Standards on Auditing™(ISA™).

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