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Canada tax changes to be aware of in 2024

As Canadians gear up for the tax season this spring, it's crucial to be aware of the new tax measures and reporting requirements that will impact the 2023 returns. Here's a breakdown of the key changes and dates, offering insights from tax professionals.

CPP and EI Changes:

Effective January 1, a significant modification has been made to Canada Pension Plan (CPP) contributions, affecting many earners. The CPP now features two maximum amounts. For those earning $68,500 or less, there's no change to their contribution rates. However, those with earnings over $68,500 fall into a second tier, contributing an additional four percent on income between $68,500 and $73,200, with a maximum extra contribution of $2,928. John Oakey from Chartered Professional Accountants of Canada (CPA Canada) warns that this, coupled with Employment Insurance (EI) contributions, could pose a substantial tax burden for middle-income earners and their employers.

Trust Reporting:

Starting this spring, Canadians must disclose beneficial ownership information for trusts when filing taxes for the previous year. This includes "bare trusts," where the legal owner has no other responsibilities, and the beneficiary maintains practical control. While bare trusts can be used for legitimate purposes, the government's focus is on preventing illicit activities. John Oakey emphasizes the potential for confusion among taxpayers who may not realize they are involved in a bare trust. CPA Canada urges the Canada Revenue Agency (CRA) to clarify these rules, and this year, penalties will be waived for late filings in this area.

Short-Term Rentals:

As of January 1, the federal government plans to deny tax expensing for certain short-term rental operators not compliant with provincial or municipal rules. Operators in banned jurisdictions or those non-compliant with local requirements won't be able to claim expenses on their property. This move aims to discourage residential properties from being used as short-term rentals, although Oakey acknowledges potential challenges as some operations might go "underground."

Important Dates:

- February 29: Deadline for RRSP contributions for the 2023 tax year.

- February 29: Employers must submit T4, T4A, and T5 slips electronically if there are more than five to avoid penalties.

- April 2: Deadline to file T3 trust returns along with Schedule 15 beneficial ownership information.

- April 30: Deadline for personal income tax returns.

- June 17: Deadline for self-employed individuals.

John Oakey emphasizes the universal advice for Canadian taxpayers in 2024: file and pay any owed taxes by the deadline to avoid penalties. Being informed about these changes will ensure a smoother tax-filing experience and help individuals and businesses navigate the evolving tax landscape in Canada.