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In case you missed it: Recent fall 2023 tax developments

It has been a busy year for tax, challenging people who work in tax to keep up with ever-changing legislation and administration. We’ve rounded up some key tax developments from fall 2023 that tax practitioners should consider as we enter the new year.

It has been a busy year for tax, challenging people who work in tax to keep up with ever-changing legislation and administration. We’ve rounded up some key tax developments from fall 2023 that tax practitioners should consider as we enter the new year:

2023 Economic Statement — On November 21, the Deputy Prime Minister and Minister of Finance released the federal government’s 2023 Fall Economic Statement, with some new tax announcements and updates on the Underused Housing Tax, Employer Ownership Trust rules and other previously announced tax measures. 

See our summary of the Economic Statement’s key tax announcements. 

CRA responds to questions from CPAs across Canada – 2023 — Over the past year, we canvassed CPAs across the country to find out their top questions for the Canada Revenue Agency (CRA), and the CRA has delivered answers on these and other topics:

  • 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 

Download the CRA’s responses to CPAs’ questions.

Government further extends deadline to file 2022 UHT returns — On October 31, 2023, the Minister of National Revenue announced that owners affected by the Underused Housing Tax (UHT) will have until April 30, 2024, to file their returns for the 2022 calendar year without being charged penalties or interest. 

See the CRA’s news release for details.

Tax blog: New and improved CRA digital services for tax practitioners — The CRA is introducing new and improved online processes and digital service options for taxpayers and practitioners. 
See our tax blog for a summary of the most important changes now in place or coming soon. 

CRA confirms limitation of liability clauses do not trigger MDR, publishes list of notifiable transactions —  A September 2023 update to the CRA’s guidance on the new Mandatory Disclosure Rules (MDR) indicates that limitation of liability clauses — a common feature of engagement letters — would normally not, on their own, be considered to trigger a reportable transaction reporting hallmark, as long as the clause’s purpose is “to generally limit the accountant’s liability for negligence (i.e., it is related to professional indemnity insurance.”

See the CRA’s MDR guidance.

In November, the CRA published a list of designated transactions and series of transactions for purposes of the MDR rules effective November 1, 2023.

Charities not required to file T3 returns for internal trusts — New rules enacted in 2022 expand the T3 Trust Income Tax and Information Return filing requirements for trusts, but it has been unclear how the rules apply to internal trusts of registered charities. 

In an email to registered charities, the CRA confirmed that the new rules generally will not apply where: 

  • the charity created the internal trust on receiving property as a gift that is subject to certain legally enforceable terms and conditions, and
  • holds that property as the trustee of the trust.

See our tax blog for more details and updates on the new trust reporting rules.

Government introduces GST rental rebate legislation — On September 21, 2023, the Deputy Prime Minister and Minister of Finance introduced legislation that removes GST on new rental housing construction.  

Specifically, Bill C-56, the Affordable Housing and Groceries Act, which received royal assent on December 15, 2023, increases  the GST Rental Rebate to 100 per cent (from 36 per cent) and removes the existing GST rental rebate phase-out thresholds for certain new rental housing projects. 

The enhanced rebate takes effect as of September 14, 2023, but the bill leaves some details to be drafted via regulations. 

See the Department of Finance Canada’s backgrounder for further details. 

Happy Holidays and best wishes for 2024!