Blog

Chartered Professional Accountants of Canada has created a round-up of some significant tax developments that took place in the second half of the year.

The original publications can be found on the Chartered Professional Accountants of Canada website, and are re-printed below.

"January 4, 2023

Year-end Finance Canada and CRA announcements – in case you missed it

Finance Canada and the Canada Revenue Agency (CRA) announced several updates as 2022 came to a close, including the following:

• 2023 Automobile Deduction Limits and Benefit Rates – Due to inflation and higher interest rates, the automobile limits were increased for all amounts other than the $300 deduction limit for new automobile loans.
• UHT guidance – The CRA released guidance on the Underused Housing Tax (UHT), which applies a 1 per cent tax on the ownership of vacant or underused housing in Canada that took effect on January 1, 2022. The tax usually applies to non-resident, non-Canadian owners. But, in some situations, it also applies to Canadian owners. We understand that the CRA will issue further guidance and we have provided suggestions on areas where more information will be needed. CPA Canada will also release a tax blog on the UHT later in January or early February.
• New filing options for special elections and returns – The CRA has released information on new filing options for “special elections and returns”, such as the T2054 election for capital dividends. At present, the CRA page only refers to filing these elections and returns electronically using My Account, My Business Account, or Represent a Client. We understand that efiling using tax preparation software will also become available at a later date. We have sent a number of suggestions and queries to the CRA and we will provide more information as it becomes available.
• EFILE / RepID update – On December 19, the CRA posted an update to its EFILE news and program updates page with more information on a new CRA initiative involving the transmission of RepIDs with returns where the EFILE system is used. In particular, the CRA stated that “starting February 20, 2023, as an additional level of security, you will be asked to enter a valid RepID when you file a return of income through EFILE software. This field will be optional during the upcoming filing season and it should be left blank if you do not have a valid RepID within the list of EFILE applicants.”

‍

"December 12, 2022

In case you missed it

As we wrap up 2022, here is a summary of some significant tax developments that took place in the second half of the year. (See our July 19, 2022 In case you missed it news item for the last time we provided this round-up.) For ease of access, we’ve included the original news items referenced here in the attached PDF.

Reporting requirements for trusts – The original proposals introduced in 2018 were expanded to include bare trust arrangements. The application of the rules was recently deferred and will now apply to trust taxation years ending after December 30, 2023. See our November 7, 2022 news item.  

Mandatory reporting – The effective date of the Reportable Transaction and Notifiable Transaction proposals will be delayed until the date the implementation bill receives Royal Assent. The Uncertain Tax Treatment proposals will apply to taxation years beginning after 2022 as previously announced. See our November 4, October 6, and August 22, 2022 news items.

Tax-Free First Home Savings Account (FHSA) – As part of Budget 2022, the government introduced the new FHSA and, subsequently, revised legislation on the new program was released as part of Bill C-32 (Fall Economic Statement Implementation Act, 2022). Contrary to the original program details in Budget 2022, the latest version of the legislation allows account holders to make use of both the Home Buyers’ Plan and the FHSA to fund the same qualifying home purchase. See our November 11, 2022 news item as well as our blog.

Canada Revenue Agency (CRA) Campaign Focusing on Personal Service Businesses (PSB) – The CRA announced a new campaign focused on PSBs earlier this year. The campaign concentrates primarily on industries that commonly hire service providers who may operate a PSB including trucking, IT consulting, accounting, construction and catering. We understand that the campaign is still underway.

Electronic Notices of Assessments (ENOA) – In Budget 2021, the government proposed legislation that would allow the CRA to provide a notice of assessment (NOA) electronically to an individual who filed their personal income tax return electronically, and has authorized that notices or other communications may be made available in this manner. The original proposals would have affected EFILERs as they would be required to provide NOAs to their clients not using CRA’s My Account. It is our understanding that any changes to the process for issuing personal NOAs will be deferred until at least 2024. See our August 22, 2022 news item.

Excessive Interest and Financing Expenses Limitations – Revised draft legislation was released and is subject to a consultation period that ends on January 6, 2023. It is now proposed that these rules will apply to taxation years beginning on or after October 1, 2023.

In addition to these major developments, some other notable developments that occurred in the latter part of 2022 included:

• Canada Emergency Business Account (CEBA) – Eligibility notices and tax treatment of repayments (November 16, 2022 news item)
• Updated CRA taxable benefit guidance on social events, gifts and awards (November 15, 2022 news item)
• The 2022 Fall Economic Statement that included updates on a number of tax measures and, in particular, a brief update on the OECD Pillar 1 and 2 initiatives (November 4, 2022 news item)
• New questions and answers on Form T1134 (October 26, 2022 news item)
• New process for EFILE authorization requests for My Business Account access (October 7, 2022 news item)
• Questions on the new Form T2054 – Election for a Capital Dividend Under Subsection 83(2) (September 12, 2022 news item)

We know that many are watching for developments related to Bill C-208 that dealt with intergenerational transfers, but there have been no updates at the time of writing."