New year, new tax measures — what to expect in 2024

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.

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.

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.

"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.