Canadian Tax Change Highlights for 2024
Registering with CRA, capital gains tax increase deferred to 2026, Home Buyers' Plan changes, new rules for sharing and gig economy workers & platforms, no rental expenses allowed for non-compliant short-term rentals, new home flipping tax for BC, bare trust reporting not required this year.
CRA Online Account Registration
We recommend that clients register to use CRA's online services, as My Account and My Business Account can provide essential information about your tax situation. CRA has a new document verification service you can use to register, so you don't need to wait up to 10 business days to receive a security code by mail. The process involves using a mobile device to take a picture of your government-issued photo ID to verify your identity.
Capital Gains
Prior to this year you paid income tax on 50% of income from capital gains, meaning it had an "inclusion rate" of 1/2. The government has proposed that the inclusion rate increase to 2/3 for capital gains realized annually above $250,000. The first $250,000 would still be taxed at the old 1/2 inclusion rate, while the amount of gain over $250,000 would be subject to the 2/3 inclusion rate.
Jan. 31, 2025 Update: the federal government announced that it is deferring the capital gains tax increase to January 1, 2026.
Home Buyers' Plan (HBP) Withdrawals
The HBP withdrawal limit has increased from $35,000 to $60,000 for withdrawals made after April 16, 2024. In addition, temporary repayment relief was introduced to defer the start of the 15-year repayment period by an additional three years for participants making a first withdrawal between January 1, 2022, and December 31, 2025. Accordingly, the 15-year repayment period will start in the fifth year following the year that the first withdrawal was made.
New Rules for the Sharing and Gig Economy
If you are a "subcontract" worker (not an employee), and you sell goods, rent property, or provide rideshare, delivery or other personal services through a platform operator (i.e. a software application or website), there are new reporting requirements that could apply to you. If you are a reportable seller, information about you will be collected by the platform operator and reported to CRA.
This information will include your name, address, tax residence, tax identification number, date of birth, business number (if applicable), bank account numbers, name(s) associated with the bank accounts, amounts paid to you (broken down by calendar quarter), fees, commissions or taxes withheld or charged by the platform operator (broken down by calendar quarter), and if you rent property: the address of each listing, land registration number (if available), and number of days each property listing was rented during the reporting period, with type of each property listing (if available).
Your platform operator is supposed to provide you with an annual copy of the information that was collected and reported to CRA by January 31, 2025, to help you file your taxes.
Short-term Rental Expenses
You are no longer able to deduct expenses (including interest) related to "non-compliant" short-term rentals as of January 1, 2024. A short-term rental is a residential property that is rented or offered for rent for a period of less than 90 consecutive days, while a non-compliant short-term rental is a short-term rental that:
- is located in a province or municipality that does not permit short-term rentals to operate at that location; or
- does not comply with all applicable provincial or municipal registration, licensing and permit requirements for operating a short-term rental.
There is some transition relief if you haven't been compliant with your registration requirements: if a short-term rental is compliant with all requirements by December 31, 2024, it is deemed compliant for the entire 2024 tax year.
New Home Flipping Tax for BC
As of January 2025, a new tax will be imposed on proceeds from sales of residential properties in BC that were held for less than 2 years. The tax rate will be 20% for properties sold within 365 days of purchase and will phase out to 0% between 366 and 730 days. The tax won't apply if the sale was due to a change in life circumstances, such as divorce, death, relocation for work, losing a job, etc. This tax is calculated by filing a separate return from your annual tax filings. See BC Home Flipping Tax to determine if you need to file it.
New Volunteer Firefighters' Amount (VFA) and Search and Rescue Volunteers' Amount (SRVA) for NB
For residents of New Brunswick: a new non-refundable tax credit for volunteer firefighters and search and rescue volunteers came into effect on January 1, 2024. You can claim it if you met the rules for claiming the amounts on lines 31220 or 31240 of your federal return. To claim either credit on NB Form NB428, enter $5,000 on line 58315 (if you claimed VFA on line 31220), or $5,000 on line 58316 (if you claimed the SRVA on line 31240).
Canada Carbon Rebate (CCR)
For residents of AB, MB, NB, NS, NL, ON and SK: it's proposed that eligibility for the CCR rural supplement be expanded to include those who live in census rural areas or small population centres of less than 30,000 individuals, as designated by Statistics Canada. These changes would be reflected in payments beginning April, 2025.
Trust Reporting for 2024
CRA announced on Oct. 29, 2024 that Bare Trusts will not be required to file a T3 Income Tax and Information Return, including Schedule 15 (Beneficial Ownership Information of a Trust), for the 2024 tax year, unless the CRA makes a direct request for these filings. This continues the exemption that was issued for bare trusts for the 2023 tax year.
New trust reporting requirements (implemented last year) still apply to other affected trusts. These affected trusts must file a T3 return with Schedule 15, unless specific conditions are met.