The Department of Finance announced a few personal tax measures which may impact you.
- Minimum tax for high earners
The government reaffirms its commitment to examining a new minimum tax regime for wealthy individuals, as announced in the 2022 federal budget. The new minimum tax regime may augment or replace the existing Alternative Minimum Tax to target high-income Canadians. Details on the minimum tax and its implementation will be included in the 2023 federal budget.
- Residential property flipping rule
The proposed residential property flipping rule announced in the 2022 federal budget would deem gains arising from certain dispositions of residential properties owned for less than 12 months to be business income.
The update extends the residential property flipping rule to profits arising from the sale of an assignment on or after January 1, 2023. Specifically, this extended rule deems profits from the disposition of the rights to purchase a residential property via an assignment sale to be business income, where the rights were assigned after these rights were owned for less than 12 months.
As a result, beware of completing any property sale in 2023 if you have not owned it for at least one year. Note there are several exceptions to the rule, with some more common being sales as a result of:
- Death
- Serious illness/disability
- Addition to family household
- Breakdown of marriage
- Trust Reporting Rule Changes Delayed One Year
Draft legislation was released that delayed the additional reporting requirements for trusts, including bare trusts, until December 31, 2023.
Also subsequently announced:
- Increase the TFSA limit
Beginning in 2023, the annual TFSA limit will increase from $6,000 to $6,500.
