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What changes for taxes in 2024?

The deadline for filing your taxes is approaching, and here are some new provisions to consider for preparing your income tax returns starting in 2023.


Here is what you need to know in the following areas:


  • Individual Tax

  • Corporate Tax

  • Trust Tax

  • Changes in 2024


To stay updated on tax news, consider bookmarking our 'Our Expertise' page by Montréal Pacific World and check it regularly.


Réunion du Montréal Pacific World

"Montréal Pacific World is bringing its expertise by offering entrepreneurs discounted assistance with their tax filings in response to these economic uncertainties."

Charles-Étienne Claudiu Gilbert, president

INDIVIDUAL TAX

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Here are the new measures applicable to individual T1 income tax returns for 2023, typically due by April 30, 2024:

1. Advance Payments of the Canada Workers Benefit (CWB): Applications are no longer required when filing the tax return. The CWB will be automatically paid to all previous year's recipients, and Form RC201 is no longer required.


2. Tool Deduction for Tradespersons: Starting in 2023, employees can deduct up to $1,000 for their tool expenses (compared to $500 previously)..


3. Tax-Free First Home Savings Account (TFSAFH): Contributions to the TFSAFH are now deductible, and income is not taxable starting in 2023. Withdrawals for the purchase of a first home are also tax exempt.


4. Home Renovation Multigenerational Housing Tax Credit: A new refundable tax credit, up to $7,500, is available for renovation work that allows an individual to live with a relative.


5. Rule on Hasty Resales of Residential Real Estate: Since January 1st, 2023, a new rule imposes full taxation on profits from resales of residential real estate held for less than 365 days, except under exceptional circumstances.


6. Home Office Deduction: The temporary flat-rate method is no longer available starting in 2023; the detailed method is now mandatory.


 

CORPORATE TAX

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1. Immediate Expensing of Capital Costs: For Canadian individuals and Canadian partnerships where all partners are individuals, this measure remains applicable to eligible assets ready for use before January 1, 2025, although it initially applied to assets ready before January 1, 2024.


2.Accelerated Investment Incentive: Eligible assets acquired after November 20, 2018, and ready for use before January 1, 2028, are eligible. A phase-out period, reducing the depreciation deduction rate, applies to assets ready after 2023, between 2024 and 2027.


3. Progressive Elimination of Enhanced Deduction for Zero-Emission Vehicles and Equipment: Eligible zero-emission vehicles and equipment ready for use after 2023 are subject to a phase-out period of the temporary enhanced deduction of 100%, announced on March 2, 2020.


4. Canadian-Controlled Private Corporations (CCPC) in Substance: Measures announced on April 7, 2022, aim to prevent Canadian resident private corporations controlled by Canadian individuals from avoiding CCPC status, thus subjecting them to refundable tax.


5. Restriction of Excessive Interest and Financing Expenses (REIFE): The rules of the REIFE regime, aimed at limiting interest deductions, will undergo modifications starting from October 1, 2023, with transitional rules in place.


6. Clean Economy Investment Tax Credits: The government is presenting a timeline for the implementation of new tax credits for investment in the clean economy, covering various technologies and sectors.


 

TRUST TAX

1. Information on Beneficial Ownership for Trusts: Starting from December 30, 2023, all trusts with a taxation year-end must annually provide a T3 form, including details on beneficial ownership, with some exceptions. This measure also applies to simple trusts, which were previously exempt from this requirement. For the 2023 taxation year, no penalties will be applied to simple trusts for late filing if beneficial ownership information is provided after the deadline, unless there is intentional fault or gross negligence.


2. Charities and Internal Trusts: The expanded reporting rules for trusts generally will not apply to internal trusts of registered charities when they are established due to legally binding conditions regarding property donated to the charity.

 

CHANGE IN 2024

Minimum Replacement Tax (MRT): The legislative proposals announced on August 4, 2023, could have a significant impact on MRT rules for 2024 and beyond. Montréal Pacific World and other stakeholders recommend adjustments to the proposed rules, considering various tax policy considerations, such as the risk of discouraging charitable donations. These aspects will be reviewed before the adoption of the final rules, and updates will be provided on our "Our Expertise" page.


Mandatory Disclosure Rules and General Anti-Avoidance Rule: The new mandatory disclosure rules apply to transactions made after June 21, 2023, while the general anti-avoidance rule targets operations from January 1, 2024. Proposed changes to expand the scope of these rules could result in additional reporting requirements for taxpayers and their advisors. We will seek clarifications from the CRA regarding the new general anti-avoidance rule in 2024.


Intergenerational Business Transfers and Employee Collective Trusts: Amendments have been made for intergenerational transfers to add new conditions and address legislative gaps. It is now possible to use employee collective trusts to facilitate buyouts during transfers to employees. These measures apply to transactions made from January 1, 2024.


Short-Term Rentals: In the Fall Economic Statement 2023, the federal government proposed to deny deductions for short-term rentals to taxpayers not complying with applicable provincial or municipal requirements, starting from January 1, 2024.


 

"You can count on us: Writing with passion."

Charles-Étienne Claudiu Gilbert, Président et chef de la direction du Montréal Pacific World
Charles-Étienne Claudiu Gilbert, MBA, DESS

"The tax reforms have been numerous in recent years, and the trend is expected to continue in 2024. To stay up-to-date, rely on our expertise in Canadian and Quebec taxation, highlighting Jean Lecavalier's skills in corporate restructuring and Véronique Bouchard's expertise in taxation. Also, bookmark our 'Our Expertise' page by Montréal Pacific World to stay informed of the latest news, and feel free to check it regularly."

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