New tax measures, and changes to existing ones, will begin affecting Canadians in 2024. But tax experts say the effects on most individuals are likely to be minor, unless they’re high-income earners.
GST/HST exemptions, the elimination of deductions for some short term rentals, new alternative minimum tax rates and changes to Canada Pension Plan (CPP) contributions are among the new measures coming in 2024.
Eliminating short-term rental deductions
The elimination of some short-term rental deductions was announced in the Fall Economic Statement (FES) and kicks in on Jan. 1.
When the federal government announced this change, it justified the move by saying that in Montréal, Toronto and Vancouver in 2020, there were almost 19,000 homes being operated as short-term rentals that could be used for permanent housing.
To encourage owners to return those units to the long-term rental market, some municipalities imposed bans on short-term rentals, while others applied restrictions on how they operate. Despite the bans and restrictions, some owners continued to rent out these properties.
“In this circumstance, where the province or municipality has banned rentals in certain areas — yes, they are banned [but] if you continue to do those activities, the federal government [said] … you must pay tax on them,” said Ameer Abdulla, a partner with EY Private.
The federal government is now eliminating that tax break, denying operators of short-term rentals any income tax deductions for expenses if they operate in provinces or municipalities that have banned short-term rentals.
In provinces that still allow short-term rentals, operators that are not compliant with local regulations and laws will also be denied the deduction.
“This is just the federal government laying on another disincentive to that existing framework,” Abdulla said.
GST exemptions
In the FES, the federal government announced it was 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.
According to the Parliamentary Budget Officer, the measure will cost $64 million in lost revenue over a five-year period.
A woman takes part in neurofeedback therapy, a type of therapy that uses audio or visual signals to help patients recognize and try to modify their thought patterns. This type of therapy, overseen by a psychologist or psychiatrist, could be exempt from GST under the new tax measures. (Submitted by Elumind Centres For Brain Excellence)
“If you really look at what their goal is, they’re trying to use the income tax system to encourage people to do socially beneficial things,” said Daniel Rogozynski, master of accounting co-director at the University of Waterloo.
Rogozynski said that making services more affordable tends to drive up demand for those services. That could be a problem in Canada, where demand for mental health services outstrips supply.
“It’s great to use the tax system to make it more affordable, but I think you still have to deal with the supply and the demand,” he said.
The federal government also began removing the GST from the construction of new rental apartments to spur new housing developments in November. In the FES, it announced it was extending that initiative to new co-op rental housing.
The CPP pension enhancement
Next year, the federal government will start collecting a second level of CPP contributions in order to meet its commitment to boost CPP payments to retirees, an effort that began in 2019.
Combined with the annual increase in CPP contributions, the added second level means 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.
Because self-employed people are both employers and employees, they have to pay both the employer and employee portions.
In 2023 there was only one pension ceiling — the maximum pensionable earnings amount. Last year, that maximum was $66,600. Once the $3,500 exemption is factored in, that means that in 2023 the 5.95 per cent CPP contribution rate was applied on incomes of $63,100 or less.
The first pension ceiling is now $68,500 — or $65,000 after the $3,500 exemption is factored in — bringing the first CPP contribution maximum in 2024 to $3,867.50 for both employers and employees.
But starting on Jan. 1, 2024, a second earnings ceiling of $73,200 comes into force.
To get from a $3,867.50 annual contribution to $4,045.50, the Canada Revenue Agency (CRA) takes the income amount over $68,500, up until it hits $73,200, and multiplies that extra amount by four per cent.
In 2024, the maximum income a person has to pay CPP contributions on under the second ceiling is $4,700, which works out to $188.
In 2025, the CRA estimates that its first CPP income ceiling will rise to $69,700, while the second earnings ceiling will rise to an estimated $79,400. That change will increase the second CPP contribution level from $188 to an estimated $388.
The alternative minimum tax
In the 2023 federal budget, the federal government said it was making significant changes to the alternative minimum tax rate.
The alternative minimum tax rate serves as a kind of safety valve preventing high income taxpayers from using deductions and other mechanisms to disproportionately lower their tax bills.
Since 1986, the alternative minimum tax has meant that, regardless of available deductions or tax measures, a person must pay at least 15 per cent tax on income above $40,000.
While it has not yet passed enabling legislation, the Liberal government has said the alternative minimum taxable income amount will rise to $173,000, and the rate that income above that amount is taxed will rise to 20.5 per cent.
Rogozynski said that while the measure was designed to target high-income earners, ordinary Canadians could be swept up.
That could happen if someone earning less than that amount sells a rental property, liquidates stocks or experiences some other form of income spike taking their annual income temporarily over $173,000.
“Let’s say you make a pile of money because you sell your shares, and then the subsequent years you don’t make as much money because you don’t own shares of a company anymore … There are provisions to recover that over the following seven years,” Rogozynski told CBC News.
Other notable tax changes for 2024
On April 1, 2024 the price on carbon goes up from $65 a tonne to $80 a tonne in provinces where the federal backstop applies.
The backstop does not apply in Quebec, British Columbia and the Northwest Territories because they have their own carbon pricing systems that meet the federal standard.
In provinces using the federal backstop, the price on carbon is applied to emitting fuels through fuel charge rates that vary from fuel to fuel based on the amount of CO2-equivalent emissions they generate when burned.
On April 1, provinces and territories using the federal backstop will see gasoline fuel charges rise to 17 cents a litre from the 2023 rate of 14 cents a litre, while the propane fuel charge will increase to 12 cents a litre from 10 cents.
Ninety per cent of government revenues from the carbon tax are returned to households through a rebate program. The other 10 per cent is directed to programs to help businesses, schools, municipalities and other grant recipients reduce their fossil fuel consumption.
Canadians will notice a difference at the pump when the carbon tax rises in April. (Darren Calabrese/The Canadian Press)
The parliamentary budget officer has consistently found that nearly all households receive more from the carbon tax rebate than they pay in direct and indirect costs. Only households in the highest income quintile are projected to pay out more than they receive — because they consume more.
Income taxes, EI premiums and TFSAs
Beginning Jan. 1, federal income tax bracket thresholds in Canada will rise 4.7 per cent across all brackets, compared to a 2023 rise of 6.3 per cent. Basic personal exemption amounts have also been adjusted to account for inflation.
Rogozynski said that because inflation has come down over last year, so has the income tax threshold increase. Income tax thresholds were increased by 1 per cent in 2021 and 2.4 per cent in 2022.
The annual tax free savings account contribution also rises from $6,500 in 2023 to $7,000 in 2024.
The maximum insurable earnings ceiling for employment insurance rises to $63,200 starting Jan. 1, up from $61,500 in 2023, which means that people only pay the $1.66 per $100 earned on the first $63,500 they earn.
For 2024, that means the maximum annual EI premium a person earning at least $63,500 will have to pay is $1,049.12, compared to a 2023 maximum of $1,002.45.
The ‘sneaky’ change to bare trusts
When Canadians do their taxes in 2024, they’ll be required to report any involvement in “bare trusts.”
Unlike express trusts, where people seek out a lawyer to create a trust, bare trusts happen almost accidentally when a parent cosigns a mortgage for a child and becomes partial owner, or when an aging parent puts their kids down as partial owners of their house in anticipation of an impending death.
In those cases, the bare trust does not earn any money for the trustee to report in a given tax year. In 2024, CRA will for the first time require that Canadians fill out a T3 return for the previous year naming the trustees, beneficiaries and settlors of each trust.
Rogozynski describes this change as “sneaky” because even though Canadians are not going to be taxed on a trust’s value, failing to report they are a member of a bare trust could result in a fine of $2,500, or five per cent of the value of all property in the trust, whichever is higher.
Dollarama Inc.’s food aisles may have expanded far beyond sweet treats or piles of gum by the checkout counter in recent years, but its chief executive maintains his company is “not in the grocery business,” even if it’s keeping an eye on the sector.
“It’s just one small part of our store,” Neil Rossy told analysts on a Wednesday call, where he was questioned about the company’s food merchandise and rivals playing in the same space.
“We will keep an eye on all retailers — like all retailers keep an eye on us — to make sure that we’re competitive and we understand what’s out there.”
Over the last decade and as consumers have more recently sought deals, Dollarama’s food merchandise has expanded to include bread and pantry staples like cereal, rice and pasta sold at prices on par or below supermarkets.
However, the competition in the discount segment of the market Dollarama operates in intensified recently when the country’s biggest grocery chain began piloting a new ultra-discount store.
The No Name stores being tested by Loblaw Cos. Ltd. in Windsor, St. Catharines and Brockville, Ont., are billed as 20 per cent cheaper than discount retail competitors including No Frills. The grocery giant is able to offer such cost savings by relying on a smaller store footprint, fewer chilled products and a hearty range of No Name merchandise.
Though Rossy brushed off notions that his company is a supermarket challenger, grocers aren’t off his radar.
“All retailers in Canada are realistic about the fact that everyone is everyone’s competition on any given item or category,” he said.
Rossy declined to reveal how much of the chain’s sales would overlap with Loblaw or the food category, arguing the vast variety of items Dollarama sells is its strength rather than its grocery products alone.
“What makes Dollarama Dollarama is a very wide assortment of different departments that somewhat represent the old five-and-dime local convenience store,” he said.
The breadth of Dollarama’s offerings helped carry the company to a second-quarter profit of $285.9 million, up from $245.8 million in the same quarter last year as its sales rose 7.4 per cent.
The retailer said Wednesday the profit amounted to $1.02 per diluted share for the 13-week period ended July 28, up from 86 cents per diluted share a year earlier.
The period the quarter covers includes the start of summer, when Rossy said the weather was “terrible.”
“The weather got slightly better towards the end of the summer and our sales certainly increased, but not enough to make up for the season’s horrible start,” he said.
Sales totalled $1.56 billion for the quarter, up from $1.46 billion in the same quarter last year.
Comparable store sales, a key metric for retailers, increased 4.7 per cent, while the average transaction was down2.2 per cent and traffic was up seven per cent, RBC analyst Irene Nattel pointed out.
She told investors in a note that the numbers reflect “solid demand as cautious consumers focus on core consumables and everyday essentials.”
Analysts have attributed such behaviour to interest rates that have been slow to drop and high prices of key consumer goods, which are weighing on household budgets.
To cope, many Canadians have spent more time seeking deals, trading down to more affordable brands and forgoing small luxuries they would treat themselves to in better economic times.
“When people feel squeezed, they tend to shy away from discretionary, focus on the basics,” Rossy said. “When people are feeling good about their wallet, they tend to be more lax about the basics and more willing to spend on discretionary.”
The current economic situation has drawn in not just the average Canadian looking to save a buck or two, but also wealthier consumers.
“When the entire economy is feeling slightly squeezed, we get more consumers who might not have to or want to shop at a Dollarama generally or who enjoy shopping at a Dollarama but have the luxury of not having to worry about the price in some other store that they happen to be standing in that has those goods,” Rossy said.
“Well, when times are tougher, they’ll consider the extra five minutes to go to the store next door.”
This report by The Canadian Press was first published Sept. 11, 2024.
TORONTO – The U.S. Consumer Financial Protection Bureau has ordered TD Bank Group to pay US$28 million for repeatedly sharing inaccurate, negative information about its customers to consumer reporting companies.
The agency says TD has to pay US$7.76 million in total to tens of thousands of victims of its illegal actions, along with a US$20 million civil penalty.
It says TD shared information that contained systemic errors about credit card and bank deposit accounts to consumer reporting companies, which can include credit reports as well as screening reports for tenants and employees and other background checks.
CFPB director Rohit Chopra says in a statement that TD threatened the consumer reports of customers with fraudulent information then “barely lifted a finger to fix it,” and that regulators will need to “focus major attention” on TD Bank to change its course.
TD says in a statement it self-identified these issues and proactively worked to improve its practices, and that it is committed to delivering on its responsibilities to its customers.
The bank also faces scrutiny in the U.S. over its anti-money laundering program where it expects to pay more than US$3 billion in monetary penalties to resolve.
This report by The Canadian Press was first published Sept. 11, 2024.
After a long day at a work event in July, Kathryn Kozody was relieved when she spotted a car with a lit-up taxi sign.
She thought it was odd when the driver told her she’d have to pay her fare with a debit card. Still, a tired Kozody hopped in the car.
“I was like, ‘Fine, it’s kind of weird, but let’s go home,'” said Kozody, who lives in Calgary.
Nothing else seemed off — until the next day when she discovered that almost $2,000 was missing from her bank account. On top of that, her debit card had someone else’s name on it.
Kozody concluded that the taxi driver was a fraudster who, during the debit card transaction, recorded her PIN, stole her card and handed her back a fake.
“I started freaking out,” she said. “It’s terrifying when they have your debit card.”
It took Kozody about two weeks to get her money back from her bank, and she’s still rattled by the experience.
The day after taking what she thought was a ride in a taxi, Kathryn Kozody of Calgary found out someone had withdrawn almost $2,000 from her bank account. (James Young/CBC News)
“It really felt like an invasion of privacy and a violation to be a victim of this scam,” she said. “I really don’t want it to happen to anybody else.”
The taxi scam isn’t new; Toronto and Montreal have been seeing it for years. But the crime is becoming more widespread.
This summer, police in Calgary,Edmonton and at least five cities in southern Ontario, including Kingston and Ottawa, posted warnings online that they had received multiple reports of the scam.
Police and the Canadian Taxi Association say the fraudsters have a helping hand: with the click of a button, they can purchase a generic — but official looking — taxi roof sign on e-commerce sites like Amazon.
Edmonton Police posted this alert on Facebook in July, warning people about an ongoing taxi scam. The city’s police department says that it received about 10 reports of the scam that month. (Edmonton Police/Facebook )
“They do have a moral responsibility to at least sell the signs to individuals that are properly licensed,” said association president Marc André Way.
However, the U.S.-based company continues to sell the product to all customers.
“These lights are legal to sell in Canada,” Amazon told CBC News in an email.
‘Eye-popping’ numbers
The taxi scam has several variations but typically ends the same way: the victim pays with a debit card, then the scammer secretly steals it and hands the victim a similar but fake card. Shortly thereafter, money disappears from the victim’s account.
Ron Hansen, deputy chief of police in Sarnia, Ont., said his department received 12 reports of the scam in July, with one victim losing $9,900.
Toronto police report that since June 2023 the department has received 919 reports of the taxi scam, totalling $1.7 million in losses.
Jessica Chin King of Toronto said after a recent cab ride, she got a suspicious activity alert from her bank. She learned $600 had been withdrawn from her account. (Craig Chivers/CBC)
The numbers are “eye-popping,” said Toronto police detective David Coffey.
“When they do get a victim, they are quick to go right into the bank accounts. They’re quick to empty them out.”
Jessica Chin King of Toronto said just 15 minutes after a recent cab ride, she got a suspicious activity alert from her bank. Turns out, $600 had been withdrawn from her account.
“I was like, ‘Wow, I can’t believe that just happened.’ I was in shock,” said Chin King, whose bank later reimbursed the cash.
She said she too was fooled by the taxi sign atop the car.
“I was in the car with somebody who wasn’t a taxi driver. Anything could have happened,” she said. “I was thankful that it was only my bank [account] that was compromised.”
Taxi light for $35 on Amazon
CBC News bought a taxi sign from Amazon for $35. It has a magnetic strip on the bottom, so it easily sticks to the top of a car.
To power the light, an attached wire can be run through the driver’s window and plugged into the car’s auxiliary power outlet, also known as the cigarette lighter outlet.
The taxi association says licensed taxi drivers typically get their roof signs from speciality suppliers, and they are hardwired to the car — not powered via the cigarette lighter.
“When you see that … it’s obvious that it’s not a legitimate taxi,” said Way, the association president.
“This is not a safe, practical way to distribute the trusted ‘Taxi’ signs,” he wrote.
CBC News ordered this $35 taxi sign on Amazon. The attached wire can be run through the driver’s window and plugged into the car’s auxiliary power outlet, while the lights for licensed drivers are hardwired into the vehicle. (Sophia Harris/CBC News)
But Amazon told Way — and CBC News — the signs will remain on its site, because the company isn’t breaking any rules.
“It’s going to be quite difficult, I think, for anyone to stop Amazon from selling a product that is perfectly legal to sell,” said Toronto criminal lawyer, Daniel Goldbloom. “It’s true that these taxi signs can be used to commit scams, but kitchen knives can be used to commit murder — and we don’t stop retailers from selling those.”
But Way isn’t giving up hope.
He says the taxi association also plans to ask other online retailers, such as Temu and eBay, to stop selling the taxi signs and will lobby provincial governments for legislation that regulates the sale of the product.
However, Coffey said he believes the best way to fight the taxi scam is to educate people about it.
“Never, never give another person control of your debit card,” the detective said.
Victims Chin King and Kozody also want to spread the word.
“The more people know, the less likely it is to happen again to somebody else,” Kozody said.
