TheFall 2023 Economic Statement proposes several changes that may have an impact on your company’s taxes.
Elimination of GST on new rental housing cooperatives
In our September 15, 2023 publication, “GST Rebate Enhancement – Residential Rental Property”, we reported on the federal government’s announcement to enhance the GST rebate from 36% to 100% for “purpose-built rental housing”, the definition of which will be set out in a regulation once the legislation is assented to. The underlying federal publication excluded housing cooperatives from the new relief measure.
However, as part of Canada’s Action Plan for Housing, the federal government has enhanced its policy to include new rental housing co-operatives, with the exception of housing co-operatives whose occupants have ownership or equity shares.
Further reading on this subject: Canada’s Action Plan for Housing – Canada.ca
Elimination of GST/HST on services rendered by psychotherapists and counselling therapists
The2023 Fall Economic Statement proposes to add the services rendered by psychotherapists and counselling therapists to those exempt from GST/HST when provided to individuals.
As a reminder, psychotherapy is not currently a profession included in the definition of “practitioner” set out in section 1 of Part II of Schedule V to the Excise Tax Act. Thus, psychotherapy services are not exempt under section 7 of the same Part, even though they are provided by certain professionals licensed by an order governing the profession of psychotherapist. As a result, psychotherapy services are only exempt in specific situations, such as, but not limited to, when provided to individuals by psychologists or physicians, or when reimbursed by the RAMQ, as in the case of Quebec.
Consequently, upon Royal Assent of the Act, services rendered by psychotherapists and counselling therapists will become GST/HST exempt.
Further reading on this subject: Services provided by psychotherapists and therapeutic counsellors
Proposed new GST/HST joint venture election rules
In each of its budgets in recent years, the federal government has consistently confirmed its intention, made public nearly a decade ago, to extend the joint venture option to any commercial activity, not just certain activities currently covered by regulations.
In light of its Fall 2023 Economic Statement, the government appears to be finally taking action, soliciting public comment on the following legislative proposals:
- Replacement of the requirement that the activities of a joint venture be eligible activities provided for by law or regulation (e.g. real estate) by a requirement that 90% or more of the activities be taxable;
- A requirement that all participants in a joint venture election be GST/HST registrants;
- The replacement of existing presumptions with revised presumptions that focus more specifically on tax accounting.
If these proposals are adopted, they will open up numerous opportunities for GST/HST joint ventures, as well as significantly simplifying tax administration for partners in such arrangements.
The public has until March 15, 2024 to comment on the legislative proposals.
An article by Jerry Médénou and Attila Demeter
Members of the Consumption Taxes team
