Tax Tip Thursday

This is a follow-up on last week’s topic where we talked about CERB repayments — there is some confusion about gross and net income!

The CRA was not clear about the income requirements. Because they posted additional information after the fact, they have admitted they were wrong!

CERB Repayment Requests

Did you receive a request to repay your CERB benefits as a result of not meeting the $5,000 self-employment income requirement?

The reason why is very important. This is not an opportunity to ignore the CRA. The only reason they are giving anybody a break on this is because of this miscommunication.

If you already repaid them and this applies to you, there is a way to recover the funds! If you need help completing the form, make an appointment and we can give you a hand.

Here is a link: https://www.canada.ca/en/revenue-agency/services/benefits/apply-for-cerb-with-cra/self-employment-income.html#contact

Short-Term Rentals

Another issue that has started surfacing and is going to be a big problem for people renting their cottages/condos short term! In the fall economic statement, the liberals have decided to regulate the tax deductions for short-term rentals. Their claim is that the new federal measures aimed at regulating short-term rentals will help municipalities enforce their policies.

As of Jan. 1, the government will deny income tax deductions when short-term rental operators are non-compliant with the applicable provincial or municipal licensing, permitting or registration requirements when it comes to their rental properties.

The government also pledged $50 million over three years to help local governments enforce restrictions against short-term rentals, with funding to begin in fiscal year 2024-25. So this will probably not go away anytime soon. And if anything, I think it will become more widespread. Many municipalities are requiring short-term rental owners to register and/or license (with a fee) in order to continue renting out their property short term.

I will be paying close attention to this issue as it unfolds. If you have a short-term rental, especially in a region where the municipalities are taking any kind of action, you want to make sure you understand the impact.

While not specific as of yet, they will be limiting or denying the expenses that are typically deductible for income from business. This could include mortgage interest, utilities, property taxes, cleaning and maintenance, etc…. I have no idea how they will police this, but it could turn out to be costly if you are not on the right side of the tax laws. The short-term rental regulations are intended to help increase the availability of rental units. There are an estimated 18,900 homes used as short-term rental properties across Toronto, Vancouver and Montreal.

Not sure any of this is going to solve any of these problems. Personally, I think people will just sell their properties.

So, do you need to repay CERB?

Great question, and it’s one you need to know the answer to. If you received funds that you repaid to the CRA, you could be able to get those back! Or, if they are currently asking you to repay them, you might not have to. But you have to be certain. So, make an appointment with us today and we can help you figure it out to keep more of your money in your pocket.

Disclaimer:

This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal or tax advice nor can it or should it be relied upon. All tax situations are specific to each individual. If you have specific tax questions you should book an appointment for a 1 on 1 consultation.