New Year, New Tax Measures — What To Expect In 2024

The new year often brings new changes, and in 2024, Canadians will be seeing a few new tax measures and changes to existing ones. While these changes are unlikely to have a significant impact on the majority of Canadians, tax experts warn that high-income earners may feel their effects more than others. Here are some of the new tax measures coming into effect in 2024.

Elimination of Short-Term Rental Deductions

Starting January 1, 2024, the federal government will be eliminating tax deductions for some short-term rentals. The move aims to encourage owners to return their units to the long-term rental market. The federal government will deny operators of short-term rentals any income tax deductions for expenses if they operate in provinces or municipalities that have banned short-term rentals. Operators that are not compliant with local regulations and laws will also be denied the deduction.

GST/HST Exemptions

The federal government will be taking the GST/HST off "professional services rendered by psychotherapists and counselling therapists." The government said it was making the change to help ensure that Canadians can afford the care they need. The measure will cost $64 million in lost revenue over a five-year period. Additionally, in the Fall Economic Statement, the federal government announced that it was extending the GST/HST exemption to new co-op rental housing.

Changes to CPP Contributions

Starting in 2024, the federal government will start collecting a second level of CPP contributions to meet its commitment to boost CPP payments to retirees. Combined with the annual increase in CPP contributions, an employee's annual CPP payment will go up by $302 in 2024, increasing from a 2023 maximum of $3,754.45 to a 2024 maximum of $4,045.50. Employers are required to match the contributions of their employees dollar-for-dollar, which means each employer will also see their per-employee CPP contributions jump by a maximum of $302.

Alternative Minimum Tax Rates

The federal government will be making significant changes to the alternative minimum tax rate, which serves as a kind of safety valve preventing high-income taxpayers from using deductions and other mechanisms to disproportionately lower their tax bills. The alternative minimum taxable income amount will rise to $173,000, and the rate at which income above that amount is taxed will rise to 20.5 percent.

Other notable tax changes for 2024 include an increase in the price of carbon in provinces where the federal backstop applies, federal income tax bracket thresholds rising 4.7 percent across all brackets, a rise in the maximum annual EI premium a person earning at least $63,500 will have to pay, and a reporting requirement for involvement in bare trusts.

While some of these changes may seem overwhelming, they are unlikely to have a significant impact on most Canadians. Tax experts advise that high-income earners may feel the effects of these changes more than others. Stay informed and speak with your tax advisor to ensure you are prepared for these new tax measures.

Stay informed and be prepared for the new tax measures coming into effect in 2024. Speak with SMR CPA to learn more about how these changes may impact you. Don't wait until it's too late. Take action now to ensure you are ready for the changes ahead.

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