2023 Fall Economic Statement Update

Deputy Prime Minister and Finance Minister Chrystia Freeland delivered the Federal Government’s 2023 Fall Economic update today in Ottawa. We have summarized some highlights below to help you navigate the business and personal tax updates and changes.

Short-Term Rentals

The Federal Government announced that it will be cracking down on short-term rentals (such as AirBnB and Vrbo properties) to address the housing crisis. The Government proposes to deny income tax deductions for expenses incurred to earn short-term rental income, including interest expenses, in provinces and municipalities that have prohibited short-term rentals. This is set to come into effect on January 1, 2024.

Underused Housing Tax

The Government of Canada implemented the Underused Housing Tax (UHT) on June 9, 2022, which impacts certain residential property owners as of December 31, 2022. Currently, every person who, as of December 31, 2022, is an “owner” of residential property in Canada, other than an “excluded owner,” is required to file a UHT return for the calendar year.

The 2023 Fall Economic Statement will eliminate the filing requirement for certain owners for the 2023 year to reduce the compliance burden. The Government is proposing to include the following “excluded owners” for UHT purposes:

  • A “specified Canadian corporation,” which is generally a Canadian corporation having less than 10 percent of its votes or equity value owned by foreign individuals or corporations;
  • A partner of a “specified Canadian partnership,” which is generally a partnership whose partners are exclusively “Canadian” or,
  • A trustee of a “specified Canadian trust,” generally a trust whose beneficiaries are exclusively “Canadian.”

They will make other technical changes, including eliminating the requirement to file for condominiumized apartment buildings.

Lastly, the Government will reduce the minimum penalties to $1,000 for individuals (from $5,000) and $2,000 for corporations (from $10,000), effective for 2022 and subsequent years.

Removing the GST/HST from Psychotherapists’ and Counselling Therapists’ Service

The 2023 Fall Economic Statement proposes that psychotherapists and counselling therapists be added as health care practitioners whose professional services rendered to individuals are exempt from the GST/HST.

Joint Venture Election Rules

The 2023 Fall Economic Statement proposes changes to the Joint Venture Election Rules for GST purposes. The Government will undertake a consultation process on these proposed rules.

Input Tax Credits

The 2023 Fall Economic Statement proposed a new input tax credit called the Clean Hydrogen Investment Tax Credit to support investment in the hydrogen industry and changes to the previously announced Clear Electricity Investment Tax Credit.

If you have any questions about how this impacts you or your business, please call us at 604.639.0909 or email reception@clearlinecpa.ca.