In the ever-evolving landscape of Canadian tax laws, staying informed about the latest changes is crucial for both individuals and businesses. As we step into a new year, several significant amendments to tax regulations and policies have been introduced that will impact a wide range of financial activities. This blog will break down all the new tax changes for 2024, making them simple and easy to understand.
Importance of Hiring an Expert
As a small business owner, you carry a lot of weight on your shoulders. Keeping up with the ever-changing tax laws can prove to be a mammoth task without the help of a reliable team. Moreover, not staying informed about these changes can lead you to pay more taxes than you need! But don’t worry, we have got you covered. With over 35 years of experience, CPA4IT can help you navigate these changes easily.
Our mission is to help our clients organize finances, create wealth, and transform wealth into a legacy. If you would like to learn more about how we can help you, book a FREE consultation with our experts today to discuss this further.
- Restrictions on Short-Term Rental Deductions
As per the Fall Economic Statement (FES), starting January 1st, certain deductions for short-term rentals will no longer be applicable. This decision by the federal government was influenced by the situation in cities like Montréal, Toronto, and Vancouver where, during 2020, nearly 19,000 properties were used for short-term rentals instead of permanent housing. To shift these properties back to long-term rentals, various municipalities have enforced bans and restrictions on short-term rentals. However, despite these regulations, some property owners persisted in offering short-term rentals. Therefore, even in areas where these rentals are banned, any continued rental activity will be taxed by the federal government.
- GST Exemptions for Mental Health Professionals
The FES also introduced the removal of GST/HST on professional services provided by psychotherapists and counseling therapists. This initiative, costing the government an estimated $64 million in revenue over five years, aims to make mental health care more accessible for Canadians.
- Enhancements to the Canada Pension Plan (CPP)
Beginning next year, the federal government will implement an additional level of CPP contributions to increase retirement payments, a process initiated in 2019. This means an employee’s annual CPP payment will rise by $302 in 2024, and employers will match these contributions. Self-employed individuals will be responsible for both the employer and employee portions.
- Changes to the Alternative Minimum Tax
The 2023 federal budget outlined significant alterations to the alternative minimum tax rate. This tax ensures that high-income earners pay a minimum tax rate, regardless of their deductions. Established in 1986, the tax currently applies a 15% rate on incomes over $40,000. Proposed changes include raising the taxable income threshold to $173,000 and increasing the tax rate to 20.5%.
- Adjustments to Income Taxes, EI Premiums, and TFSAs
From January 1st, federal income tax bracket thresholds will increase by 4.7%. The basic personal exemption amount will also be adjusted for inflation. Experts highlighted that this increase correlates with the recent decline in inflation rates. Additionally, the annual tax-free savings account contribution limit will rise to $7,000 in 2024. The maximum insurable earnings for employment insurance will increase to $63,200, impacting the maximum annual EI premiums.
- Mandatory Reporting for Bare Trusts
A notable change in 2024 tax filing involves the mandatory reporting of involvement in “bare trusts.” These trusts often form inadvertently, such as when parents co-sign mortgages for children. Despite not generating income, the Canada Revenue Agency (CRA) will require a T3 return to be filed, detailing trustees, beneficiaries, and settlors.
We can help!
Navigating through the ever-changing tax laws without the help of an expert can prove to be a tedious task. Here at CPA4IT, our goal is to take over your financial worries so you can focus your time on where it matters – growing your business. Our tax strategies are designed to help you retain more of your hard-earned money by leveraging deductions you did not know about before.
If you would like to learn more about how we can help you, book a FREE consultation with our experts today to discuss this further.
