First Home Savings Accounts will be available as of April 1, 2023.

Starting on January 1, 2023, the Residential Property Flipping Rule deems profits arising from dispositions of residential property (including a rental property) that was owned for less than 12 months to be business income, subject to some exceptions.

The 2022 Fall Economic Statement proposes to extend the deeming rule to profits arising from the disposition of the rights to purchase a residential property via an assignment sale if the rights were assigned after having been owned for less than 12 months.

For the sale of constructed property, the 12-month holding period for the Residential Property Flipping Rule will reset once the taxpayer who entered into a purchase and sale agreement secures ownership of the property. This is to prevent bypassing the rule simply by holding the rights to purchase the property before it was constructed.

The new reporting requirements for trusts that were originally proposed in 2018 have now been passed into law, applicable for taxation years that end after December 30, 2023 (one year later than the most recent legislative proposals).

Rather than applying every year to receive their anticipated Canada Workers Benefit (“CWB”) entitlement for a taxation year, the 2022 Fall Economic Statement announced the intention to automatically provide individuals an entitlement for the current taxation year through quarterly advance payments. Individuals must have received the CWB for the previous taxation year and the CRA must have received and accessed their income tax return for the previous year prior to November 1 of the current year. Advance payments start automatically in July 2023 for the 2023 taxation year. The existing option for advance payment application ends after January 1, 2023.

Alberta: Indexation of Personal Income Tax Announced

Bill 2, the Inflation Relief Statutes Amendment Act, 2022, was introduced in the Alberta Legislature and received first reading on December 7, 2022. If passed, the legislation and supporting regulations will enact, among other measures, personal income tax indexation retroactive to the 2022 tax year.

Specifically, Alberta’s basic personal amount will increase to $19,814 from $19,369 for 2022, an increase of 2.3%. Other credit amounts and tax bracket thresholds will also rise by the same percentage.

For additional details, review Bill 2.

2022 Ontario Fall Economic Outlook and Fiscal Review

On November 14, 2022, the Ontario government released the Ontario Fall Economic Outlook and Fiscal Review. The following is a summary of new tax-related announcements. The government is planning to:

1. mirror the federal increase to the small business deduction phase-out threshold, increasing the upper threshold for taxable capital from $15 million to $50 million, for taxation years that begin on or after April 7, 2022;
2. expand eligible expenditures for the Ontario Production Services Credit to include location fees, effective for expenditures incurred after November 14, 2022; and
3. introduce temporary immediate expensing for eligible property, up to $1.5 million per year, acquired by

• • a CCPC—applicable to eligible property that is acquired after April 18, 2021, and that becomes available for use before January 1, 2024, or
  • an unincorporated business carried on directly by Canadian‐resident individuals (other than trusts), and Canadian partnerships where all the partners are CCPCs or Canadian‐resident individuals (other than trusts)—applicable to eligible property that is acquired after December 31, 2021, and that becomes available for use before January 1, 2025, subject to special rules for certain partnerships.

New Refundable Tax Credit Granting a New One-Time Cost of Living Amount

The government announced a new refundable tax credit granting a new one-time cost of living amount of up to $600 where the individual’s 2021 new income does not exceed $54,000. Where the individual’s net income for 2021 is greater than $54,000 but does not exceed $104,000, the payment will be up to $400. Individuals will not have to apply to receive the tax assistance provided they have filed their 2021 tax return by June 30, 2023. The amount of the credit will be paid as of December 2022.

2022 Fall Update on Québec’s Economic and Financial Situation

The 2022 Fall Update on Québec’s Economic and Financial Situation was presented on Thursday, December 8. Only one major announcement affects the 2022 year. As of the 2022 taxation year, the maximum amount for an eligible senior considered in the calculation of the refundable senior assistance tax credit is increased to $2,000 from $411. This amount is also no longer subject to annual indexation. A mechanism will be introduced as of the 2023 tax year to revalue the current 5% reduction rate. The 2022 credit will be paid in the spring of 2023 following the filing of the tax return for the 2022 tax year.  Due to the increase in this credit, the refundable tax credit for seniors’ activities will be eliminated in respect of registration or membership fees paid after December 31, 2022.