Canada's individual tax summary reflects all 2021 federal, provincial, and territorial budgets. The summary is based on enacted and proposed legislation and assumes that the proposed legislation will become law. Generally, budget proposals and draft legislation are enacted into law, even with a minority federal government, which is currently the case. For further details of the proposed new individual tax measures noted in the summary, see our Tax Insights '2021 Federal budget: From pandemic to recovery' at www.pwc.com/ca/budget.
Employee stock options
Recently enacted legislation limits the use of the current employee stock option tax regime and moves towards aligning the tax treatment of stock options with the United States for employees of large, long-established, mature firms, effective for stock options granted after 30 June 2021. See Equity compensation in the Income determination section and our Tax Insights 'New rules on the taxation of employee stock options are now in effect: Are you ready?' at www.pwc.com/ca/taxinsights for more information.
Mandatory disclosure rules
The 2021 federal budget proposes to enhance Canada’s mandatory reportable transaction disclosure rules, subject to public consultation, for taxation years beginning after 2021. See Mandatory disclosure rules in the Tax administration section for more information.
Tax debt avoidance
The 2021 federal budget proposes to introduce a new anti-avoidance rule that applies to transfers of property made after 18 April 2021 where, for the purposes of the existing rules dealing with tax debt avoidance, a tax debt will be deemed to have arisen before the end of the taxation year in which the transfer of property occurs if certain conditions are met. See Tax debt avoidance in the Tax administration section for more information.
Mutual fund trust redemptions
Recently enacted legislation addresses deferral and character conversion benefits realised by mutual fund trust unitholders on redemption of their mutual fund trust units, by denying deductions to mutual fund trusts under certain conditions, for taxation years of mutual fund trusts beginning after 18 March 2019. See Capital gains in the Income determination section for more information.
Sales taxes and the digital economy
Recently enacted legislation introduces new Goods and Services Tax/Harmonised Sales Tax (GST/HST) compliance requirements for businesses engaged in various types of e-commerce. The provinces of British Columbia, Manitoba, Quebec, and Saskatchewan have implemented similar changes to their provincial sales tax regimes. See GST/HST and the digital economy and Provincial retail sales tax (PST) under Consumption taxes in the Other taxes section and our Tax Insights ‘Indirect tax hot topics: Do they impact your business? (8 April 2021)’ at www.pwc.com/ca/taxinsights for more information.
The 2021 federal budget proposes to implement a luxury tax on sales, for personal use, of luxury cars, boats, and aircraft over certain threshold sales prices, effective 1 January 2022. See Luxury tax in the Other taxes section for more information.
Canadian housing owned by non-residents
The 2021 federal budget proposes to introduce an annual 1% tax, starting in 2022, on the value of non-resident, non-Canadian owned Canadian residential property considered to be vacant or underused. Under the proposed framework, certain residential property owners in Canada would be required to file an annual declaration for each Canadian residential property they own, even if they can claim an exemption from the tax. See Property taxes in the Other taxes section and our Tax Insights 'Department of Finance launches consultation on the proposed underused housing tax' at www.pwc.com/ca/taxinsights for more information.
Reporting requirements for trusts
The 2018 federal budget proposed new tax return filing and information reporting requirements for trusts that will come into effect for taxation years that end on or after 31 December 2021. If the proposed new rules are enacted, trustees will be required to gather and report significantly more information; the filing deadline for a trust with a 31 December 2021 taxation year end is 31 March 2022. See Reporting requirements for trusts in the Other issues section and our Tax Insights 'Navigating the proposed trust reporting rules: Trustees need to be prepared' at www.pwc.com/ca/taxinsights for more information.