Please click here to read our January 2023 edition of the LRK Tax Newsletter.
This newsletter highlights the most notable tax developments affecting small business owners. In 2023, the government has or will be looking to introduce new taxes:
- The Underused Housing Tax (UHT) – This new tax is meant to apply to foreigners who own vacant homes in Canada. However, suppose you’re a Canadian and own residential real estate in a corporation. In that case, you must still file a UHT tax return (in addition to your regular tax return) indicating your corporation has no foreign owners. If you fail to file this return, you face a penalty of at least $10,000. If you have a corporation that owns real estate in Canada, please get in touch with your accountant about this new filing requirement.
- A New Minimum Tax (on the Rich) Coming in 2023 – We all know the government needs funds to pay for the spending it did and proposes to do. The liberal government has announced that they will introduce a new minimum tax in the 2023 budget that could thwart the tax planning you have in place. You should have your accountant review the tax planning strategies you have in place and see if you need to accelerate some planning before this tax takes effect.
- Real Estate Investors are Starting to Hit the Sell Button but Need to Watch Out for the New Anti-Flipping Tax – Due to rising costs, Real Estate investors are not making the return they had once hoped for. They are starting to hit the sell button. If they are not careful, they could walk right into the new Anti-Flipping Tax that taxes gains as regular business income and not as capital gains (where only 50% gets taxed).
The tax rules have become increasingly complex in the last few years with many landmines. Also, these new tax rules are coming with astronomical penalties for non-compliance (i.e., $10,000 for even filing the UHT return one day late!). The CRA has become stricter with the penalties. This is why we analyze the latest legislation day and night, even before it is passed into law, to give our clients peace of mind knowing that they are paying the least amount of taxes possible and that their filings are taken care of.
If you found this newsletter useful, please feel free to pass it on to your team of advisors as it will be useful for them as they also consider your financial, estate, and business plan to preserve and grow your hard-earned wealth.
We wish you and your family a happy, healthy, and prosperous 2023!
Sincerely,
LRK Tax Team
