In case you missed it: Recent tax developments

It’s been a busy year in the tax world, with ever changing tax legislation and administration to keep on top of. We’ve rounded up some key tax developments that practitioners should have on their radar as we enter the fall:

Government releases significant draft tax legislation package – On August 4, 2023, the Department of Finance released a package of draft legislative proposals, to implement various tax measures, update certain previously released draft legislation, and make certain technical changes. 

The draft legislation covers a wide variety of measures, and includes:

  • Intergenerational business transfers
  • Employee ownership trusts
  • Alternative Minimum Tax
  • Revised Excessive Interest and Financing Expenses Limitations (EIFEL) rules and GAAR amendments
  • Digital services tax and the global minimum tax (Pillar two)
  • Numerous green initiatives

Finance has launched public consultations on the proposals, with comments to be submitted by September 8, 2023 (or by September 29, 2023, for submissions on the global minimum tax). 

New mandatory disclosure rules now in effect – As the Mandatory Disclosure Rules (MDR) received royal assent on June 22, 2023, we wanted to remind you that: 

  • the revised reportable transaction rules will apply to transactions entered into after royal assent,
  • the new notifiable transaction rules will apply to transactions entered into after royal assent, 
  • the new requirement to report uncertain tax treatments will apply to tax years beginning after 2022.

While the new requirement to report notifiable transactions will technically apply to transactions entered into after royal assent, no transactions have yet been officially designated for this purpose. (Finance Canada, however, has provided sample notifiable transactions as part of their consultation papers). The Canada Revenue Agency’s (CRA) published guidance (referenced below) indicates that the required due date for a notifiable transaction under subsection 237.4(9) only applies after the date of designation of the notifiable transaction.

The CRA recently released guidance on the application of the mandatory disclosure rules along with the following prescribed forms:

Our July 21 news item highlights some of the outstanding issues we have raised and discussed with the CRA.  

Finally, worth noting, we have been hearing concerns from many members around standard limitation of liability clauses found in engagement letters potentially triggering the contractual protection hallmark. We have raised this as a priority issue for the CRA to address and have asked that it provide guidance.

For further information on the rules, please review our blog.

New reporting requirements for trusts to apply to taxation years ending after December 30, 2023 – As trust reporting rules were expanded and will require trustees to gather and report significantly more information, trustees need to be prepared to meet these requirements. In addition, these rules will apply to bare trust arrangements. The new rules apply to taxation years ending after December 30, 2023, so the filing deadline will be April 1, 2024 (since the legislative due date of March 30, 2024, is a Saturday), for trusts with a taxation year end of December 31, 2023.  For more information on the requirements, please see our blog

We have been providing feedback to the CRA on issues it should be aware of as it plans for the administration of these rules, and we have encouraged the CRA to provide guidance as early as possible.  This includes concerns that have been recently brought to our attention on the impact the rules may have on express trusts created with charities or not-for-profit organizations.   

2022 Underused Housing Tax returns due October 31, 2023 – As we previously reported, the CRA had announced that penalties and interest will be waived under the Underused Housing Tax (“UHT”) Act for the 2022 calendar year, provided the return is filed and any UHT due is paid by October 31, 2023. The UHT rules are broader than what the government had initially announced and it’s important to note that the rules could impact certain Canadians. Review our blog on the UHT to understand the requirements.

Also, we have had discussions with the government to re-examine the impact of the UHT on residential properties owned by Canadians. See the summary of our concerns raised and recommendations made in our May 23, 2023, news item

We continue to have discussions with the government on the key issues and concerns related to each of these measures. We’ll continue posting important and relevant news updates on this page so be sure to bookmark this page and check back often.

Enjoy the rest of the summer!