Details of Fall Economic Update
Federal government tax revenue is $456.2 billion.
Federal expenditures equal $496.3 billion.
Budget deficits of $40.0 billion for 2023-24 and $38.4 billion for 2024-25 and $38.3 billion for 2025-26.
This year's government total debt is $1,254.6 billion.
Annual interest payments on the government debt will rise to $52.4 billion for this fiscal year and are projected to climb soon to over $60 billion.
As can be seen, interest payments now exceed 10 per cent of the total government expenditures, which had been considered a "red line" not to be crossed.
GDP growth is projected to be flat at 0.4 next year or possibly fall into negative growth. Social value produced and consumed by 600,000 new immigrants per year is the only factor keeping the GDP from experiencing a deep drop into recession.
$15 billion will be made available in loan funding, beginning in the 2025-2026 fiscal year, to build more than 30,000 homes across Canada.
$1 billion is to go towards a new affordable housing fund over three years, beginning in 2025-2026, which the federal government projects will help build 7,000 new homes.
$7 billion is available in a clean-tech economic investment fund allocated for special contracts to companies for investments to lower their greenhouse-gas emissions.
$35 million is slated for the government's "public inquiry into foreign interference attempts."
$50 million is available to support municipalities in cracking down on short-term rentals. The federal government intends to deny income tax deductions when short-term rental operators are not complying with provincial and municipal rules.
$129 million will go towards an updated Canadian journalism tax credit, beginning this year. Ottawa proposes to increase the cap on work-time income paid per eligible newsroom employee to $85,000, from $55,000. It is also increasing the amount of salary that can be claimed under the program to 35 per cent, from 25 per cent.
Seasonal workers: The government says up to four additional weeks of regular employment insurance benefits will be available to seasonable workers beginning this year.
No personal or corporate tax rate changes.
The government will allow financial institutions that receive dividends on "taxable preferred shares" (as defined in the Income Tax Act) to continue to be eligible for this deduction.
The Update introduces a temporary tax exemption for certain capital gains realized on the sale of a business to an Employee Ownership Trust. This tax exemption would apply on the first $10 million in capital gains realized on the sale.
Bona fide concessional loans with reasonable repayment terms from public authorities will generally not be considered government assistance, effective November 21, 2023.
Taxpayers will no longer be able to claim certain income tax deductions related to expenses for short-term rental income. Specifically, taxpayers will not be able to claim deductions:
- For expenses incurred to earn short-term rental income, including interest expenses, in provinces and municipalities that have prohibited short-term rentals;
- Where short-term rental operators are not compliant with the applicable provincial or municipal licensing, permitting, or registration requirements.
Any property that is required to convert clean hydrogen into ammonia will be eligible for the Clean Hydrogen Investment Tax Credit at a 15 per cent rate. Eligible projects can use Power Purchase Agreements and other similar instruments to calculate a project's carbon intensity instead of using the electricity grid's carbon intensity, where the purchased electricity is sourced from hydro-, solar-, or wind-powered generation that meets certain conditions:
- The use of renewable natural gas would be eligible for the purpose of calculating an eligible project's carbon intensity, subject to certain conditions.
The Update expands eligibility for the Clean Technology and Clean Electricity Investment Tax Credits to include systems that use specified waste materials solely to generate electricity, heat or both electricity and heat. Eligible property would include, among others, electrical generating equipment, heat generating equipment, and heat recovery equipment.
Expansion of the eligibility for the Clean Electricity Investment Tax Credit including a timeline for the implementation of other proposed clean economy credits including Carbon Capture, Utilization, and Storage (CCUS) investment tax credit; Clean Technology investment tax credit; Labour requirements related to the Clean Technology, Clean Hydrogen, Clean Electricity, and CCUS investment tax credit.
Government plans to introduce legislation in early 2024 for a Clean Technology Manufacturing investment tax credit.
Government intends to hold consultations with provinces and territories on the Clean Electricity investment tax credit (for publicly-owned utilities) and introduce related legislation in fall 2024.
The Update proposes changes to allow the Canada Revenue Agency to share taxpayer information with an official of Public Services and Procurement Canada to help administer and enforce the Canadian Dental Care Plan.
The Update proposes to make the exemption for international shipping income in the Income Tax Act generally available to Canadian resident companies.
The Update announces changes to the joint venture election rules, which allow taxpayers to choose simplified GST/HST accounting under certain circumstances.
The Update changes the Underused Housing Tax (UHT) rules for certain property owners saying, "specified Canadian corporations", partners of "specified Canadian partnerships" and trustees of "specified Canadian trusts" will not have a reporting obligation under these rules (i.e., they will be considered "excluded owners" for UHT purposes). It introduces a new UHT exemption for residential properties in certain lower population areas that are held as a place of residence or lodging for employees, effective for 2023 and subsequent calendar years. It provides that unitized ("condominiumized") apartment buildings are not "residential property" for UHT purposes, effective for 2022 and subsequent calendar years. It reduces minimum non-compliance penalties to $1,000 for individuals (from $5,000) and $2,000 for corporations (from $10,000) per failure, for 2022 and subsequent calendar years. It provides that an individual or spousal unit can claim the UHT "vacation property" exemption for only one residential property for a calendar year, effective for 2024 and subsequent calendar years.
The Update proposes to exempt professional services rendered to individuals by psychotherapists and counselling therapists from the GST/HST.
The Update expands the previously announced removal of the GST on qualifying new rental housing construction to co-operative housing corporations that provide long-term rental accommodation, provided other conditions are met. This measure applies only to projects that begin construction between September 14, 2023, and the end of 2030, and that complete construction before 2036.
The government will proceed with previously announced tax measures to "modernize the general anti-avoidance rule (GAAR); the Interest deductibility limits (EIFEL rules); the details of Substantive Canadian-controlled Private Corporations; the intergenerational business transfer framework; the alternative minimum tax (AMT); and Employee Ownership Trusts."
The government will proceed with other previously announced tax measures including: "Enhancing the reduced tax rates for zero-emission technology manufacturers; Flow-through shares; and the Critical Mineral Exploration Tax Credit -- lithium from brines."
This article was published in
Volume 53 Number 11 - November 2023
Article Link:
https://cpcml.ca/Tmlm2023/Articles/M530113.HTM
Website: www.cpcml.ca Email: editor@cpcml.ca