New changes are expected to come into effect in 2023. Let us help you prepare for the tax changes while also supporting your business opportunities. We can take the time to understand your unique personal circumstances to help you maximize your tax refund!
Residential Anti-Flipping Rules
The 2022 Budget proposes to target individuals who purchase a house (or any kind of residential property) and sell it for much more than they purchased it for if the sale occurs within 12 months of the original purchase. The sale would be required to be reported as business income with no ability to claim the property as either a capital property or a principal residence. Exceptions include a major life event such as a death or disability of a family member, birth of a child, a new job, or a divorce.
Tax-Free First Home Savings Account
To assist Canadians with the increasing challenge of saving for a down payment on a first time home, the Budget proposes to introduce a new tax-free first home savings account that blend the benefits of both RRSP and TFSA . Specifically, contributions to the account would be tax-deductible in a similar fashion to a RRSP but the withdrawal, would be non-taxable if it is for the purchase of a home, similar to the existing tax-free savings account. The maximum amount for this proposed account would be $40,000.
Multi-Generation Home Renovation Credit
The 2022 Budget recognizes many Canadians live in multigenerational homes with grandparents, parents and children living together. The Federal government proposes to supports these families by providing a home renovation tax credit up to $7,500 when the renovation is for the purposes of establishing a secondary suite for a senior or an adult with a disability.
Luxury Goods Tax
The Budget proposed a tax on certain new luxury cars, aircrafts, and boats that is expected to come into force as of January 1, 2022. The new tax will apply on the following purchases:
The lessor of 20% of the price above $100,000 or 10% of the full price for luxury cars and aircrafts.
The lessor of 20% of the price above $250,000 or 10% of the full price for boats.
GST/HST will still apply to applicable purchases and is applied to the final sale price, inclusive of the luxury tax. Therefore, GST/HST is being levied on the tax that is levied on the purchase cost.
Property Vacancy Tax for Non-Residents/Non-Canadians
Starting in 2022, real estate that is vacant or under-utilized will have a new national tax of 1% levied on the assessed value annually.
Under the proposed rules, an owner would be exempt from the tax if the residence in question is the primary place of residence of:
the owner;
the owner's spouse or common-law partner; or
a child of the owner or of the owner's spouse or common-law partner, but only if the child is in Canada for the purposes of authorized study and the occupancy relates to that purpose.
An owner eligible for the exemption would make an election in the annual return that they would file with the CRA.
Teacher & Early Childhood Educator School Supply Tax Credit
A proposal to increase the Educator School Supply tax credit to 25%. In addition to the tax credit increase, the government has also broadened the definition of eligible supplies, removing the requirement that teaching supplies must be used in a school or regulated child care facility.
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